Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 8, Problem 7P
To determine
The reason that TV broadcasts have characteristics of public good and the characteristics of cable services like HBO.
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- Differentiate between a public good and common resources.arrow_forwardPlease solve part d,e and f!!! Three roommates, Jim, Saleem, and Ritesh, are thinking about buying a new speaker system for their apartment. The speaker system would be a public good if they buy them, and the total cost would be $300 which would be shared equally among the three. Jim values it at $80, Saleem values it at $140, and Ritesh values it at $70. If the speakers are purchased each person gets a payoff equal to their net valuation (valuation minus cost share); if they are not purchased each gets zero payoff. a)Is it socially efficient that they buy the speaker system? With reference to the definition of a public good, why or why not? The roommates decide that they will write down their net valuations, and if these reports sum to more than zero, they will buy the TV (sharing the cost equally), or else they will not. b) If all were to report their true valuations, what payoff would each agent earn? c) Show that if Jim and Ritesh submit their true net valuation, then Saleem does…arrow_forwardWhat is a public good? What are its two defining characteristics? Provide an example.arrow_forward
- What examples do you have of public goods? What is the free-rider problem?arrow_forwardWhy is a football game on ESPN a quasi-public good but a game on the NBC, CBS, or ABC is a public good? How are over-the-air broadcasters (NBC, CBS, ABC) able to overcome the free rider problem?arrow_forwardIs it in the public interest to tax cigarettes? Explain your position using some of the economic concepts or graphs.arrow_forward
- What are the two key characteristics of public goods?arrow_forwardWhat are the two key characteristics of a public good? What is an example of a public good? What is the problem with leaving the provision of public goods up to the market system? What is the solution?arrow_forwardWhat is an externality? How do they affect market efficiency? If an externality is present, where is the socially optimal point of production? Where will the market produce if there is no government intervention? How do we get from the private market equilibrium to the socially optimal one?arrow_forward
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