Answer the question based on the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. Q 1 2 3 4 5 Pa $3 2 1 0 0 Pb $5 4 3 2 1 Suppose government has already produced 4 units of this public good. The amount individual B is willing voluntarily to pay for the fourth unit is

Answer the question based on the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. Q 1 2 3 4 5 Pa $3 2 1 0 0 Pb $5 4 3 2 1 Suppose government has already produced 4 units of this public good. The amount individual B is willing voluntarily to pay for the fourth unit is

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 3PA

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Refer to the above table and answer the question on the basis of the given information for a public good. TH Quantity 1 PR $10 Ps $8 2 7. 7 3 5 6 4 3 5 1 4 PRand Psare the prices that Rafael and Sarah, respectively, are willing to pay for the marginal unit of a public good, rather than do without it. Rafael and Sarah are the only members of society. Now suppose the public good can be provided by the government at a constant marginal cost of $10. The optimal quantity of the public good is: 1) 1 unit. 2) 2 units. 3) 3 units. 4) 4 units. vonlst
6 Answer the question based on the following information for a public good. Pa and Pp are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. Pa Pb $ 3 $ 5 2 eBook 1 3 4 If the marginal cost of producing this good at the optimal quantity is $8, the optimal quantity must be Multiple Choice 3 units. 4 units. 5 units. 1 unit 2 units. Mc Graw Hill 9 Type here to search 10:29 AM 84°F Sunny 10/2/2021
Why is it difficult for private markets to providethe optimal quantity of a public good? Why is itdifficult for government to provide the optimalquantity of a public good?
Which 2 of the following are true: (If you wish to change your response, please untick your selected answer before selecting another answer.) O If private provision of a public good is x units and the efficient level is y units, then the government can make the market efficient by providing y - x units. O In the presence of externalities, Walrasian Equilibria can never be Pareto efficient. O If a person cleans their home one evening, then wakes up the following morning in a good mood due to having a clean home then this is an example of a positive externality. If Andy's consumption of a good inflicts a negative externality on Bob then the efficient solution must be where Andy doesn't consume any of that good. When stormy weather destroys a householder's fence this is an example of a negative externality. If a homeowner pays someone to fix the pavement outside their house to improve their access, but this also improves the access of other pedestrians then this is an example of a…
Using the following graph, an increase in output from 120 units to 160 units would $24 $22 $20 $18 $16 Price $14- $12- $10- $8 $6 $4 $2- 20 40 Supply (private cost and external cost) 60 80 100 120 140 160 180 200 be an action of which a benevolent social planner would approve. increase total economic well-being. increase the external cost per unit of output. O move the market from a socially efficient outcome to a socially inefficient outcome. -Supply (private cost) Demand (private value) Quantity
According to the Coase theorem,a. private actors can reach agreement to solve theproblem of externalities without the government.b. corrective subsidies are the best policy to solvethe problem of positive externalities.c. negative externalities are a problem for societybut positive externalities are not.d. when two private actors amicably solve theproblem of externalities, they shift the problem toa third party
Consider the market for fire extinguishers.a. Why might fire extinguishers exhibit positiveexternalities?b. Draw a graph of the market for fire extinguishers,labeling the demand curve, the social-value curve,the supply curve, and the social-cost curve.c. Indicate the market equilibrium level of outputand the efficient level of output. Give an intuitiveexplanation for why these quantities differ.d. If the external benefit is $10 per extinguisher,describe a government policy that would yield theefficient outcome.
Consider a public good that has 2 consumers, Dylan and Fred. Dylan’s demand for the public good is higher than Fred’s demand for the good. Show graphically and explain why the private market will provide an inefficient level of that public good.
What are “public goods”? Pick a government good/service that you consume, define what makes it a public good (how is its non-rival and non-excludable). As we discussed in class, the existence of externalities creates an efficiency problem in the provision of these goods and services. Unlike the private sector, State and Local Governments can intervene. Using the example of the public good, you have provided, please provide an example of an externality that will impact its provision, and detail how a government could/should intervene.
19. This next question will require you to draw on what you have learned about supply and demand and taxes. A study finds that leaf blowers make too much noise; therefore it is considered a externality, so the government imposes a $10 tax on the sale of every unit to correct for the social cost of the noise pollution. The tax completely internalizes the externality. Before the corrective tax, Leaves are Us Manufacturing regularly sold blowers for $100 and market quantity is 300. Draw the supply and demand curve for leaf blowers. Label the axes, the curves, market price, market quantity, and equilibrium. Which curve represents private or internal costs? represents external and private costs? This is also known as What is the private market price? What is the private market quantity? Which curve costs. After the tax is in place, the consumer price of leaf blowers rises to $105. With this change in price, the number of leaf blowers will (decrease/increase). Why will this happen?
Two towns, each with three residents, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. In each town, somepeople enjoy fireworks more than others.a. In the town of Bayport, each of the residentsvalues the public good as follows:Frank $50Joe $100Callie $300Would fireworks pass a cost–benefit analysis?Explain.b. The mayor of Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. Who would vote in favor, and whowould vote against? Would the vote yield thesame answer as the cost–benefit analysis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost–benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, to split the cost equallyamong all residents. Who would vote in favor,and who would vote against? Would…
Consider a public good, G, that is shared by Consumer A and B. Each can purchase G at the price of $20 per unit. A's marginal benefit from this public good is given by MBA-50-G. If A thinks B is getting 10 units of G, then A's optimal contribution into G will be units. On the other hand, if A thinks B is getting 20 units of G, then A's optimal contribution into G will be units. Blank # 1 Blank # 2 A/ N