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: Suppose that 100 people live around a hazardous waste dump. If the people continue to live there for 20 years, one of them will likely contract a painful, non-fatal cancer that will lead to $1 million in health care costs, foregone wages, and pain and suffering. Assume this is all the damage this waste will ever do (the waste loses its toxicity after 20 years). The Environment Canada has three choices:
a. Do nothing.
b. Clean up at a cost of $4 million
c. Relocate the families at a cost to taxpayers of $1 million; fence off the property for 20 years.
i. Rank the solutions in terms of efficiency. Explain your reasoning.
ii. Rank the solutions in terms of safety. Explain your reasoning.
A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre
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The circular flow of income in an open economy An open economy is one in which international trade exists. Assume also that there is government spending and taxation. Thus
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Q. How commercial banks create money? Commercial banks clearly can't influence the amount of currency in economy or monetary base because they aren't allowed to print money. Th
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