Suppose certain fireworks are legal in a residential area on the Fourth of July.
ID: 1118721 • Letter: S
Question
Suppose certain fireworks are legal in a residential area on the Fourth of July. The fireworks have been approved for safety, but they do cause noise pollution so their use must be limited. Jenny and Salo like to purchase fireworks for their families; the table below shows each individual's willingness to pay for fireworks. The price of fireworks is $2 per firework Hillingness to pay enmy salo nts 1e 20 25 5e Instructions: Enter your answers as whole numbers aIf a quota of 30 fireworks per person is imposed, Jenny is willing to pay $ for her last firework. Salo is willing to pay S for his last firework. b. If the govenment wants no more than 60 total fireworks to be purchased, a tax of Ss supply curve is perfectly elastic such that the full burden of the tax will fall on consumers should be imposed. (Note that the Under this tax, Jenny will purchaser fireworks and Salo will purchase fireworks.Explanation / Answer
Answer A;- If a quota of 30 fireworks per person is imposed , Jenny is willing to pay ……………… for her last firework. Salo is willing to pay ………………..for his last firework.
The correct Answer is:- Jenny is willing to pay ……………… $7 ( for 30 fireworks, Jenny’s net marginal benefit is 7)
Salo is willing to pay ………………..$4 ( for 30 fireworks, Salo’s net marginal benefit is 4)
Answer B;- If the government wants no more than 60 total fireworks to be purchased , a tax of $........... should be imposed.
Correct Answer:- $6
Reason:- The total firework of 60 is obtained when Jenny uses 40 fireworks and Salo uses 20 fireworks. The corresponding marginal benefit is $6. This will be the tax.
Answer:- Under this tax, Jenny will purchase………..fireworks and Salo will purchase ………fireworks
Correct Answer:- Jenny will purchase……….. 40 fireworks
Salo will purchase ……… 20 fireworks
Reason:- The total firework of 60 is obtained when Jenny uses 40 fireworks and Salo uses 20 fireworks. The corresponding marginal benefit is $6. This will be the tax.
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