People who live on the edge of small lakes.
1. People who live on the edge of small lakes sometimes have break walls constructed on their property by the shore. A break wall is typically a vertical column of wood or concrete that prevents high water levels from covering part of the owner’s property, reducing the size of the beach, and/or eroding the yard. However, several communities have restricted property owners from building break walls. Can you think of a reason for that? Hint: Think about potential externalities of building a break wall.
2. When are quantity restrictions not the same as price restrictions (via taxes)? Describe one situation in which the government would be better off imposing quantity restrictions than setting a tax, and explain why quantity restrictions are better in that case.
3. Suppose someone says that a relatively small percentage of Americans own a large percentage of total assets and that therefore the government should redistribute wealth to those less fortunate. Which part of that statement is normative and which part is positive, if any? Explain.
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