5.. "Since a public good is enjoyed by all members of society, willingness to pay for thegood will not diminish as the amount produced increases." Evaluate and use anexample to support your answer.This statement is (correct incorrect). Public goods face (increasing, constant, diminishing ) returnslike any other good. Consider the number of highways in a town, for example. Citizens of a town arevery willing to pay for the first highway, as it produces large gains to the town. Successive highwaysproduce (more and more, less and less ) willingness to pay because the citizens face lower and lowergains from the increased number of highways. In a town of, say 20,000, 15 highways (would, wouldnot) produce much more benefit than just 2 or 3 highways because of ( increasing, constant,diminishing ) returns.

Public goods are goods which are non rival: consumption by one does not affect consumption by…

Answered: 5.. "Since a public good is enjoyed by…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A small town provides a fireworks display, which is a public good, every fourth of July. For simplicity, assume the town only has two residents: Hayden and Madison. Their demands for the fireworks display are illustrated in the figure to the right. Construct the market demand curve for this public good. 8.00 7.50- 7.00- 6.50- 6.00- 5.50- 5.00- 4.50- Use the line drawing tool to draw the market demand curve (DMarket) for the fireworks display. Properly label this line. 4.00- DMadison DHayden 3.50- Carefully follow the instructions above, and only draw the required objects. 3.00- 2.50- P 2.00- 1.50- 1.00- 0.50- 0.00- 2 4 6 8 10 12 14 16 Quantity (number of fireworks) Price (dollars per firework)
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $105 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $105 per ton. PRICE (Dollars per ton of paper) 700 630 560 490 420 350 280 210 140 70 0 0 1 O O 2 ☐ ■ 3 O 4 5 QUANTITY (Tons of paper) ☐ 6 Supply (Private Cost) Demand (Private Value) 7 Social Cost ?
The following table shows how the marginal benefit of a service varies for five consumers. Quantity 1 2 3 4 Serkan 150 125 100 75 Asuman 125 100 75 50 Bahar 100 75 50 25 Murat 200 150 125 125 Meriç 600 400 200 150 Derive the demand curve for this service assuming that it is a public good. If marginal cost of the good is 850, what is the efficient output of the public good? If marginal cost of the good is 425, what is the efficient output of the public good? If marginal cost of the good is 850, what is the efficient output assuming it is private good?
When economists say that one of the characteristics of a Public Good is that it is “non-excludable”, they mean: Select one: a. that the government makes the good widely available to virtually anyone in the economy. b. the good’s price is so low that virtually anyone can afford it. c. that once the good is supplied, it is difficult to prevent those who do not pay for it from consuming the good. d. that once a unit of the good is provided, it can be jointly consumed by more than one consumer at the same time.
Use the following to answer questions 7-8: Figure: Positive Externalities and Production of Semiconductor Chips Price, marginal | social benefit of chip $55 50 45 40 35 30 25 20 15 10 100 200 300 400 500 600 700 800 900 Quantity of chips 7. (Figure: Positive Externalities and Production of Semiconductor Chips) If the marginal external benefit of producing a chip is $20, then the socially optimal quantity of chips is and the socially optimal price is A) 200; $20 B) 300; $25 C) 500; $35 D) 600; $40 8. (Figure: Positive Externalities and Production of Semiconductor Chips) If the socially optimal production of chips is 500, the government could achieve the socially optimal level of production by granting a Pigouvian subsidy of: A) $5. B) $10. C) $15.
Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.
1. An externality exists when agent A’s utility or production function depends on real variables chosen by another agent B, without an offer of compensation or other attention given to the effect of A’s well-being. True or False 2. The "invisible hand" of the market leads to the efficient allocation of goods and services, even in the presence of externalities. True or False 3. If there is a negative production externality, the market price of the good will be higher than the socially-optimal price. True or False
4. Suppose the supply curve of portable radio rentals in Golden Gate Park is given by P= 5+ 0.1Q and the demand curve is by P = 20 -0.2Q. a. If each portable radio imposes $3 per day in noise costs on others, by how much will the market equilibrium quantity exceed the socially optimal number of rentals? b. How would the imposition of a $3 per unit tax affect the efficiency in this market?
What are public goods? Describe its two characteristics and give an example of a public good. Why might the government intervene in the provision of public goods. (Please answer concisely.)
We recognize four types of goods, namely; private goods, public goods, club goods, and shared resources. Roads are an example of a public good. When the congestion gets worse, will the roads remain public goods or turn into club goods or common goods? Explain
2. The PMB associated with a product's consumption is PMB-SMB = 360 - 4Q and the PMC = 6Q. The marginal external damage associated with this good's production is MD=2Q. To correct the externality, the government decides to impose a tax of $T per unit sold. | a) What is the level of production without pollution? b) What is the socially optimal level of production? c) What tax should the government set to achieve the social optimum? d) Explain the difference in the two values in (a) and (b)?
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.

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