Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 4RQ
To determine
The production possibility frontier with public and private goods.
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3. Voluntary contributions toward a public goodLarry and Raphael are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit.Since a public park is a public good, both Larry and Raphael will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Larry and Raphael choose to contribute, then a total of $800 would be contributed to the public park. So, Larry and Raphael would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table.Since a new suit is a private good, if Larry chooses to spend $400 on a new suit, Larry would get $400 of benefit from the new suit and Raphael wouldn't receive any benefit from Larry's choice. If Larry still spends $400 on a new suit and…
13. Refer to the diagram below, which illustrates the PPFs for two producers of two goods that
are free to trade with one another.
a) 1 and 2 only.
b) 1 and 3 only.
y
c) 1 only.
d) 2 only.
PPF2
PPF₁
B
D
C
Which of the following production choices are EFFICIENT?
1. Both producers are operating at point B.
2.
Producer 1 is operating at point E and producer Producer 2 is operating at point B.
Producer 1 is operating at point C and producer 2 is operating at point A.
3.
E
will happen to the equilibrium price and
3. Voluntary contributions toward a public good
Eleanor and Kyoko are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or
to keep that $400 for a cell phone.
Since a public park is a public good, both Eleanor and Kyoko will benefit from any contributions made by the other person. Specifically, every dollar
that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Eleanor and Kyoko choose to contribute, then a total
of $800 would be contributed to the public park. So, Eleanor and Kyoko would each receive $640 of benefit from the public park, and their combined
benefit would be $1,280. This is shown in the upper left cell of the first table.
Since a cell phone is a private good, if Eleanor chooses to spend $400 on a cell phone, Eleanor would get $400 of benefit from the cell phone and
Kyoko wouldn't receive any benefit from Eleanor's choice. If Eleanor still spends $400 on…
Chapter 4 Solutions
Microeconomics
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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- The many identical residents of some cities love drinking apple juice. The cost of producing a bottle of apple juice is $5, and the competitive suppliers sell it at this price. Each resident has the following willingness to pay for the tasty refreshment: Quantity Willingness to Pay (Dollars) First bottle 10 Second bottle 8 Third bottle 6. Fourth bottle 4 Fifth bottle 2 Further bottlesarrow_forward3. What is static efficiency? Illustrate your answer with the aid of a well-labelled diagram. What is the difference between static efficiency and dynamic/intertemporal efficiency? In your answer, make sure that you mention the condition that must be satisfied for static efficiency to be attained. Also, mention the condition that must be satisfied for dynamic/intertemporal efficiency to be attained. What is an open access resource? Give an example of an open access resource. Explain why open access often leads to inefficient allocations.arrow_forward-- 49. Table 11-4 There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners - Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. Adams Chen $100 First tree Second tree Third tree Fourth tree A. 3 B. 2 C. 1 50 D. 4 20 10 Benitez $115 110 100 50 $120 110 80 40 Davis $90 Refer to Table 11-4. Suppose the cost to plant each tree is $90. How many trees should be planted to maximize the total surplus of the four homeowners? 50 30 Oarrow_forward
- 3. Voluntary contributions toward a public good Kyoko and Rina are considering contributing toward the creation of a public park. Each can choose whether to contribute $300 to the public park or to keep that $300 for a weekend getaway. Since a public park is a public good, both Kyoko and Rina will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.90 of benefit. For example, if both Kyoko and Rina choose to contribute, then a total of $600 would be contributed to the public park. So, Kyoko and Rina would each receive $540 of benefit from the public park, and their combined benefit would be $1,080. This is shown in the upper left cell of the first table. Since a weekend getaway is a private good, if Kyoko chooses to spend $300 on a weekend getaway, Kyoko would get $300 of benefit from the weekend getaway and Rina wouldn't receive any benefit from Kyoko's choice. If Kyoko still spends $300 on…arrow_forward3. Voluntary contributions toward a public good Sean and Bob are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a weekend getaway. Since a water fountain is a public good, both Sean and Bob will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.90 of benefit. For example, if both Sean and Bob choose to contribute, then a total of $600 would be contributed to the water fountain. So, Sean and Bob would each receive $540 of benefit from the water fountain, and their combined benefit would be $1,080. This is shown in the upper left cell of the first table. Since a weekend getaway is a private good, if Sean chooses to spend $300 on a weekend getaway, Sean would get $300 of benefit from the weekend getaway and Bob wouldn't receive any benefit from Sean's choice. If Sean still spends…arrow_forwardA strategy for consumer 1 in the private provision of public goods model is: A quantity of public good purchases for each level of public good purchases of consumer 2. A quantity of public good purchases. A quantity of public good purchases that maximises 1's utility for each level of public good purchases of consumer 2. The total quantity of public goods consumed by consumer 1. O O O Oarrow_forward
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