Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 12, Problem 12SCQ
Consider the case of global environmental problems that spill across international borders as a prisoner’s dilemma of the sort studied in
- In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
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Suppose that the St Clair river, which flows along the border between Ontario and Michigan,
becomes polluted and needs to be cleaned. The American and Canadian governments need to
make a decision on whether to clean the river or not. They must make this decision
simultaneously. If both countries invest in cleaning the river, they each get a payoff of 871. If one
country invests in cleaning the river, but the other one doesn't, the country that spends the
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and they each get a payoff of -639.
Suppose that the U.S. and Canada are again making decisions simultaneously. Find the Nash
Equilibrium in mixed strategies.
In the mixed strategy Nash Equilibrium, what is the probability that Canada invests in…
Consider the following decision by two countries: a small country (C1) and a large
country (C2). When both countries cooprate and agree to an environmental
agreement, C1 receives 4 and C2 receives 5 units of benefit. When they do not
cooperae, they incur costs of -1, and -2, respectively. The payoffs associated with
other outcomes are described in the table below.
Large country (C2)
Agree to environmental
protection (cooperate)
Do not agree to
environmental protection
(do not cooperate)
The Socially Optiomal outcome is
The Nash Equilibrium is
Agree to environmental protection
(cooperate)
C1:4
C2: 5
C1: 2
C2: 6
[Choose ]
Small country (C1)
[Choose ]
Do not agree to environmental
protection (do not cooperate)
C1:2
C2: -3
C1: -1
C2: -2
Michigan (MI) and Wisconsin (WI) both border Lake Michigan. Both states pollute Lake Michigan and both states suffer the consequences of the pollution. However, the two states face a prisoner’s dilemma of the sort studied in Chapter 12. Each country must decide whether to protect or not to protect Lake Michigan from pollution. The payoffs from the choices are shown in the table below.
Michigan
Protect
Not Protect
Wisconsin
Protect
WI gains 500
MI gains 500
WI loses 300
MI gains 600
Not Protect
WI gains 600
MI loses 300
WI loses 250
MI loses 250
From the table, we know that if Wisconsin chooses to protect the lake, Michigan will choose to ________________ the lake. If Wisconsin chooses to not protect the lake, Michigan will choose to __________________ the lake
Question 1 options:
protect;protect
not protect;protect
protect;not protect
not protect;not protect
Chapter 12 Solutions
Principles of Economics 2e
Ch. 12 - Identify the following situations as an example of...Ch. 12 - Identify whether the market supply curve will...Ch. 12 - For each of your answers to Exercise 12.2, will...Ch. 12 - Table 12.5 provides the supply and demand...Ch. 12 - Consider two approaches to reducing emissions of...Ch. 12 - Classify the following pollution-control policies...Ch. 12 - An emissions tax on a quantity of emissions from a...Ch. 12 - Four films called Elm, Maple, Oak, and (Shelly,...Ch. 12 - The rows in Table 12.7 show three market-oriented...Ch. 12 - Suppose a city releases 16 million gallons of raw...
Ch. 12 - The state of Colorado requires oil and gas...Ch. 12 - Consider the case of global environmental problems...Ch. 12 - A country called Sherwood is very heavily covered...Ch. 12 - What is an externality?Ch. 12 - Give an example of a positive externality and an...Ch. 12 - What is the difference between private costs and...Ch. 12 - In a market without environmental regulations,...Ch. 12 - What is command-and-control environmental...Ch. 12 - What are the three problems that economists have...Ch. 12 - What is a pollution charge and what incentive does...Ch. 12 - What is a marketable permit and what incentive...Ch. 12 - What are better-defined property rights and what...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - What are the economic tradeoffs between low-income...Ch. 12 - What arguments d0 low-income countries make in...Ch. 12 - In the tradeoff between economic output and...Ch. 12 - What does a point inside the production...Ch. 12 - Suppose you want to put a dollar value on the...Ch. 12 - Would environmentalists favor command-and-control...Ch. 12 - Consider two ways of protecting elephants from...Ch. 12 - Will a system of marketable permits work with...Ch. 12 - Is zero pollution possible under a marketable...Ch. 12 - Is zero pollution an optimal goal? Way or why not?Ch. 12 - From an economic perspective, is it sound policy...Ch. 12 - Recycling is a relatively inexpensive solution to...Ch. 12 - Can extreme levels of pollution hurt the economic...Ch. 12 - How can high-income countries benefit from...Ch. 12 - Technological innovations shift the production...Ch. 12 - Show the market for cigarettes in equilibrium,...Ch. 12 - Refer to Table 12.2. The externality created by...Ch. 12 - Table 12.12, shows the supply and demand...Ch. 12 - A city currently emits 15 million gallons (MG) of...Ch. 12 - In the Land of Purity, there is only one form of...
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