Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 5RQ
To determine
Theprovision of public and private goods.
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Students have asked these similar questions
i)A public good
a )costs essentially nothing to produce and is thus provided by the government at a zero price. b)can never be provided by a nongovernmental organization. c) can't be provided to one person without making it available to others as well.
d)generally results in substantial negative externalities.
ii)The market demand curve for a public good
a) shows the total value that all individuals place on each additional unit of the good.
b) is derived in the same manner as demand curves for private goods.
c)is derived by horizontally summing all individual demand curves.
d)shows the total number of units that would be produced by the public sector at each possible price.
iii)The market demand curve for a public good
a) shows the total value that all individuals place on each additional unit of the good.
b)is derived in the same manner as demand curves for private goods.
c) is derived by horizontally summing all individual demand curves.
d)shows the total number of units…
The costs or benefits of a market activity that affect a third party are called:
A) externalities.
B) public goods.
C) common resource goods.
D) artificially scarce (or club) goods.
Imagine that a town of 200 people is trying to decide whether to pay for mosquito control. The town has surveyed their citizens
and they each say they value mosquito control at $75. Mosquito control only costs $2,500 so the town goes ahead and pays for the
service. When the town asks for donations to pay for the mosquito control, they only receive $1,000. What does this result show?
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a
The town's citizens were free riders.
b
The mosquito control suffered from the tragedy of commons.
The mosquito control cost must have been greater than its economic benefit.
d.
The town's survey must have overestimated the value of mosquito control.
Chapter 4 Solutions
Macroeconomics: Principles, Problems, & Policies
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 - Use marginal cost/marginal benefit analysis to...Ch. 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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Similar questions
- What are the two characteristics of public goods? Explain the significance of each for public provision as opposed to private provision. What is the free-rider problem as it relates to public goods? Is U.S. border patrol a public good or a private good? Why? How about satellite TV? Explain.arrow_forwarda)Some advocates of anti-poverty programs claim that fighting poverty is a public good. Explain what these advocates mean by classifying charity as a public good. b)Why do governments tend to run programs that help the poor? Can the private sector be left to run those programs? Discuss your answer by focusing on externalities and market failurearrow_forwardMarket failure occurs when the private sector fails to distribute our resources efficiently through the pricing system. Externalities and a lack of public goods and services are two examples of market failure.Give an example of a positive and a negative externalities that someone faces in their life. Also, what are some public goods and services that you utilize in your everyday life?arrow_forward
- Explain the concepts given below by exemplifying them.a) Public Choice?b) Economic Efficiency?c) Pareto Optimality?d) Market Failure ?e) Government Failure?arrow_forwardA3) Consider production involving a positive extemality. Which one of the following statements is true? a) Without government intervention the market will produce excess supply. b) Marginal social cost is higher than marginal private cost. e) Marginal social benefit is less than marginal private benefit. d) A subsidy to producers could increase production to the socially optimum level. e) A Pigouvian tax could be imposed on the producer to achieve the socially optimum level of production.arrow_forwardThe socially optimal outcome is the outcome that: Select one: a. has the most externalities. b. is most efficient for society as a whole, including for buyers, sellers, and bystanders. c. has the most benefits for society as a whole, regardless of the costs involved. d. benefits the largest number of people.arrow_forward
- When people decide to buy cars, they have to decide between fuel economy and other features. It is argued that there is a "public good" issue involved in this decision. Why might that be? How the existence of public-good characteristics affect the price of the car? Include in your answer a good definition of a public good and free riders.arrow_forwardIndividuals A, B and C have the following individual demand curves: Q=7-5P Q=10-P Qc=18-3P Make a price quantity chart for each consumer. Then add a column showing the total quantity demanded for a private good. Next show the quantity price chart showing the total demand for a public good. Graph and label all 5 demand curves on the same graph (see provided graph sheet). If the marginal cost is $4 a unit how many units should be bought if the good is a private good? How many units would each individual buy? If the marginal cost is $6 a unit, to the nearest .1 how many units should be bought if the good is a public good? To the nearest S 0.01 what are the Lindahl prices each person is willing to pay? Do consumers of public goods have the same incentives to reveal their true valuations of Public goods as they do of Private goods? Why or why not?arrow_forward1). a).Explain why allocating property rights might help solve the inefficient outcomes generated by externalities. b).In what real-world circumstances might this approach be easier to implement and why?arrow_forward
- Cause and Individual Example of Market Failure with a Negative Externality In Section 1, externalities are introduced as well as market failures, where the socially optimal output is not the same as what the market produces by itself. For this discussion, your task is to: Describe a real-world negative externality. In your externality identify who are the participants in the market and who receives the spillover How are the incentives for the firm misaligned from the rest of society to make the externality?arrow_forwardDescribe a positive or negative externality that you have observed in your life. In the example you provide, determine if the externality is positive or negative, explain why, and discuss if you feel like government intervention is present and/or needed. If so, how does (or how could?) the government increase market efficiency?arrow_forwardWhen people decide to buy cars, they have to decide between fuel economy and other features. It is argued that there is a "public good" issue involved in this decision. Why might that be? How the existence of public-good characteristics affect the price of the car? Include in your answer a good definition of a public good and free riders. Be complete and use the language of economics.arrow_forward
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