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2. Why does the free-rider problem induce the government to provide public goods
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- 2 The market for education confers positive externalities on society. Which of the following is an example of a positive externality that it provides? Higher quality of public institutions like government and law Subsidies for providing education Higher salary for the person earning a degree More colleges and universities X OOOO W F2 3 16 80 F3 E 888 FA R DE F % V T MacBook Air 6 Y B & 7 H tv NA 2 N 8 K M 0 W Aa zoom 0Suppose electricity generates a negative externality in production If so, then A. the marginal social cost of electricity is less than the marginal private cost . B. the marginal social cost of electricity equals the marginal private cost . C. the marginal social benefit of electricity is less than the marginal private benefit . D. the marginal social cost of electricity equals the marginal social benefit. E. the marginal social cost of electricity is greater than the marginal private cost.4. The advantages of command-and-control environmental regulations used in the 1970's include: a. the provision of incentives to go beyond prescribed limits b. great flexibility in how and where to make pollution reductions c. proven success in reducing levels of pollution d. all of the above 6. With regard to international environmental issues, the Openstax text argues that: a. high income countries should use their superior economic position to force low income countries to reduce pollution b. climate change is too important of an issue to leave it to a market-oriented approach for a solution c. the practical details of an international solution are forbiddingly complex d. all of the above 7. According to the Openstax text: a. Increased environmental protection reduces economic output b. Environmental protection measures usually enhance economic output c. Increased environmental protection only reduces economic output in poorer countries d. Environmental protection measures only…
- 1. How does the provision of public goods at the local level affect their optimality?1. Production of widgets results in emissions of a harmful pollutant, at a rate of 1 ton of pollution per widget produced. The marginal cost of producing widgets is $4 per widget. The demand curve for widgets is 9 - Q, where Q is the quantity of widgets. The widget market is competitive, such that both consumers and producers are price takers. The government is considering policies to address this negative externality. a. The first policy being considered is a technology standard. The abatement techonol- ogy being required costs $2 per widget. What is the social cost of this policy? b. The marginal damages of the pollutant are constant and valued at $1 per ton. What are the social benefits of the technology standard? c. Would the technology standard represent an improvement in economic efficiency for society? Why or why not? d. Now assume that the policy maker imposes a Pigouvian tax on the emissions of the pollutant. What are the social benefits of this policy? e. What are the net…2. Efficiency in the presence of externalities Vaping imposes many external costs on society secondhand smoke, the adverse health burdens imposed on society, and so on. Therefore, the market equilibrium quiantity of vapes does not equal the socially optimal quantity. The following graph plots the demand for vapes (their private value), the supply of vapes (the private cost of producing them), and the social cost of vapes, including both the private cost and external costs. Use the block point (plus symbol) to indicate the market equilibrium quaneity Next, use the purple point (diamond symbol) to indicate the socially opamal quantity ? PRICE OF VAPES Demand (Private Value) QUANTITY OF VAPES Social Cost Supply (Private Cost) + Market Equilibrium Socially Optimal Level
- 1Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…1) Define and give an example of a public good. Can the private market provide this good on its own? Explain.
- 1. Explain how a global-positioning anti-theft device installed by one car owner can produce a positive spill over to other citizens in a community. 2. Why are fish in the ocean an example of a resource that suffers from the tragedy of the commons but cattle grazing in a farmer’s pasture does not suffer from the tragedy of the commons?Solve part d,e and f. (f)What does this problem teach you about the optimal provision of public goods?3. The effect of negative externalities on the optimal quantityof consumption Consider the market for pharmaceuticals. Suppose that a pharmaceutical factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing additional pharmaceuticals imposes a constant per-unit external cost of $280. The following graph shows the demand (private value) curve and the supply (private cost) curve for pharmaceuticals. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $280 per unit. PRICE (Dollars per unit of pharmaceuticals) 800 720 640 560 480 400 320 240 160 80 O 1 2 3 □ O O ㅁ 4 Supply (Private Cost) Demand (Private Value) 5 6 7 QUANTITY (Units of pharmaceuticals) Social Cost ? The market equilibrium quantity is units of pharmaceuticals, but the socially optimal quantity of pharmaceuticals production is units. To create an incentive for the firm to produce the socially optimal…
