Economics Paper

Topics: Economics, Market failure, Externality Pages: 2 (529 words) Published: September 10, 2014
No Dogs Allowed

1. What economic question(s) does this case require the town to ask? What benefits and services would we provide to the community by building the dog park? Is building a dog park the best use of the undeveloped land? What percent of the population would benefit from building a dog park? 2. List the possible resources that the town would need to construct and maintain the park. Possible resources would include money, labor to construct the park and clear out the trees and maintenance employees. 3. What town resource(s) are scarce?

Recourses that are scarce would be open space and school capacity. 4. Who will be the consumers using this public good?
Consumers that would use the park would be the 7% of dog owners plus however many unregistered pet owners there are in the area. 5. What is the opportunity cost of building this park? Explain. The opportunity cost would be lost revenue from the luxury town houses and a loss of available funds to renovate the school. 6. Identify at least one pro and one con for each of the following options: a. leaving the land undeveloped

One pro would be that we get to keep the open space that is scarce. One con would be the lost revenue. b. selling the land to real estate developers to build homes
One pro would be the income from the new housing and one con would be risking overcrowding. 7. What, if any, market failures might exist in this town? Explain. A market failure is leaving the land undeveloped because it’s a loss of potential income which would add to the surplus of money that could be used to renovate schools.

8. Create a chart that identifies the positive and negative externalities of building the park. Positive Externalities
Negative externalities
Pet owners pleased
Place for dogs to gallivant

Loss of wildlife habitat
Dog barking noise annoying people who live in the town houses near the dog park

9. How could the town government counteract the negative externalities? A...
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