APEC 460/660 Spring 2006 Kilkenny

Week 10 HOMEWORK #5

Due Monday, April 17

In about 3 typed pages, write a short essay accompanied by the appropriate illustrations, diagrams*, equations, formulas, or data that explains the market failure, if any, associated with your term paper topic; and the justification, if any, for government intervention, public policies, or public provision.

This homework challenges you to apply theories about the appropriate role of government presented by Todaro & Smith (chapter 11) or Kilkenny (ßsee linked ‘lecture’) to your term paper topic. The homework problem is FOR CREDIT and will be graded. This assignment allows you to capture some economies of scale. It double-dips with writing your term paper: writing it will cover an important part of what should be in your term papers.

*For example, Nota (our TA) supplies the following diagram of a market in which some of the benefits of the activity are either non-excludable or non-rival, such that the private willingness to pay (the MPB) is lower than the social benefit (“SMB”). In these situations, the market fails to support the provision of enough of the thing. That justifies some role for the government.