Suppose You and I Are Identical

question 4

Essay

Suppose you and I are identical.We put up fireworks in our adjacent backyards on a national holiday, and we can both enjoy each other's fireworks.
a.Can you identify an externality?
b.Can you identify any missing markets?
c.Do you think we will provide more or less than the efficient number of fireworks?
d.If we could vote on a tax to be imposed on us fund fireworks in our back yards, would we vote for a lump sum tax (imposed equally on both of us) that will cause more fireworks to be put up than what we would put up on our own?
e.Suppose instead the government implements a Pigouvian subsidy.How would the number of fireworks compare to what would happen in (d)? How much of a subsidy would you think we would both get for every dollar of fireworks each of us individually buys?

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Definitions:

Consumer Ideology

The set of beliefs and values that underpins consumer behaviors and the significance of consumption in society.

Social Problems

Issues that negatively affect a significant number of people within a society, prompting collective concern and often requiring societal or policy solutions.

Right Product

The right product refers to a good or service that perfectly meets the needs and preferences of a particular consumer or market segment.

Hegemony

The dominance of one group over others, often presented as common sense or natural, enabling the dominant group to maintain its power and privilege.