1. Suppose that the only way to reduce pollution from paper production is to reduce output. The government imposes a tax equal to the marginal harm from the pollution on the monopoly producer. Show that the tax may or may not raise welfare?
2. Do publishers sell the socially optimal number of managerial economics textbooks? Discuss in terms of public goods, rivalry, and exclusion.
3. You and your roommate have a stack of dirty dishes in the sink. Either of you would wash the dishes if the decision were up to you; however, neither will do it in the expectation that the other will deal with the mess. Explain how this examples illustrates the problem with public goods and free riding?