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of your happy disposition, but because you are rich, and wealth
is well known to be a great comforter.
C: You are right, he replied; they are not convinced: and there
is something in what they say; not, however, so much as they
imagine. I might answer them as Themistocles answered the
Seriphian who was abusing him and saying that he was
famous, not for his own merits but because he was an
Athenian: 'If you had been a native of my country or I of yours,
neither of us would have been famous.' And to those who are
not rich and are impatient of old age, the same reply may be
made; for to the good poor man old age cannot be a light
burden, nor can a bad rich man ever have peace with himself. C: That
is true, he said.
S: Yes, that is very true, but may I ask another question? What
do you consider to be the greatest blessing which you have
reaped from your wealth?
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ECON 440 Explain intuitively
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This question refers to the problem of externalities
(a) Explain intuitively why the presence of externalities causes the
first fundamental theorem of
welfare economics to fail (b) Draw and label a diagram to illustrate
your answer to part (a) then use it to explain a Pigouvian
tax 1 (c) Draw another diagram and use it to explain Coase Theorem
(d) Discuss the merits of the Pigouvian and Coasian solutions to the
externality problem 2 2. This question refers to the provision of a pure
public good
(a) Define a pure public good and state and explain the condition for
its efficient provision (b) Give an intuitive explanation for why the
Lindahl mechanism does not give an efficient allocation
if voting is strategic 3 (c) Give an example of preferences over the
level of public good provision such that majority voting
does not lead to a clear decision (d) Give an intuitive explanation for