Homework Help: Macroeconomics

Posted by A-tan on Sunday, September 27, 2009 at 9:37pm.

All houses in LA pay for weekly trash service. I pay $45 per quarter to have trash removed from my house once a week. My neighbor, the little old lady next door, always has much less trash than we do. I believe it would be good for the total economy if all houses had to pay for trash service by the pound. If we had to pay per each pound of trash that was removed rather than the current system of paying for a weekly pick-up of all trash. What are the possible incentive behaviors or unintended consequences that would happen if the city government instituted such a policy?

Macroeconomics - Ms. Sue, Sunday, September 27, 2009 at 9:47pm
Ye gads! Who is going to weigh each household's trash? What expensive equipment would they need?

Paying by the pound does not sound like a profitable enterprise.

Why do you think paying by the pound would be good for the economy?
Macroeconomics - A-tan, Sunday, September 27, 2009 at 11:05pm
Thanks. I want to know what is INCENTIVE BEHAVIOR if goverment instituted this policy. For example, Seat belt law, the probabiliy of surviving an auto accidents rises. but this law also affects behavior by altering incentives.
Macroeconomics - economyst, Monday, September 28, 2009 at 9:07am
Think a bit outside the box. What would you do if such a policy was enacted? What would a cheapskate do? (e.g., start burning his trash). What would a sleezeoid do? (e.g., dump his trash in someone else's bin).

Remember to think like an economist. The MC of tossing more trash under the current system is zero. Under the proposal it is > 0)

I hope this helps. Lotsa luck.

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