Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Chapter 4, Problem 5RQ
To determine
The provision of public and private goods.
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PRICE (Dollars per unit of electric cars)
500
450
400
350
300
250
200
150
100
50
0
H
0
O
□
1
0
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The market equilibrium quantity is
O
3
5
QUANTITY (Units of electric cars)
☐ Supply
(Private Cost)
6
Demand
(Private Value)
Social Cost
units of electric cars, but the socially optimal quantity of electric car production is
To create an incentive for the firm to produce the socially optimal quantity of electric cars, the government could impose a
per unit of electric cars.
units.
of 1
A 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 O
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
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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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