Q Question 1 6 / 9 pts Public Goods and Externalities Suppose that the Town of Bumbletree is considering hiring an additional police officer. The cost of the additional officer is $70,000. The reduction in crime is estimated to be worth $10 for each of Bumbletree’s 5,000 residents. What should the city do? The value of public goods? 1. What is the Public Value of the additional officer? 2. What is the Public Cost of the additional officer? 3. Should the the Town of Bumbletree do? Support your responses Response should have three components: 1. Value 2. Value 3. Response and Analysis Question 2 5 / 5 pts Dick owns a dog whose barking annoys Dick's neighbor Jane. Suppose that the benefit of owning the dog is worth $500 to Dick and that Jane bears a cost of $700 from the barking. Assuming Dick has the legal right to keep the dog, a possible private solution to this problem is that...(it is possible that there is no solution ) Response: Construct a Coase Private solution to the problem. Your solution MUST have a brief analysis and a financial solution. Question 3 7 / 10 pts Graphing Choices Types of Goods Problem: On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. Suppose that the Minnesota State Park Service institutes a variable fee structure. On weekdays when the picnic areas get little use, the fee is zero. On normal weekends, the fee is $8 per person. On holiday weekends, the fee is $14 per person. Solution: The mayor of Isle suggests taking no action regarding the congestion as he market will provide a solution? 1. Define the Type of Good (as uncorrected) described in the problem. 2. Identify the graph which illustrates the uncorrected problem. 3. Will the defined solution correct the problem? Response Model: 1. Define the Type of Good 2. Identify the graph (Graph E) 3. Respond/Analyze

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