Categorize each of the following five goods as a Private Good, Common Good, Club Good, or Public Good. Descriptions of each good will serve as hints. Remember, our textbook outlines only two types of goods, see the notes and lecture video for the other two types. a) An NPR (radio) signal which is available to everyone with a radio, whether or not they contribute, the signal does not diminish no matter how many people tune in. [Select] b) A new Ford truck this can only be purchased by one person, you can not drive it off the lot without paying for it. [Select] c) A subscription to Disney+ - you can not have a subscription without paying for it, purchasing a subscription does not lower the total number of subscriptions available. [Select] d) A fireworks show on the 4th of July - the fireworks are visible to everyone in the town, whether or not they contributed anything to the display, one person viewing the fireworks does not make them less visible for anyone else. [Select] e) A membership to 24 Hour Fitness - your membership does not reduce the number of memberships available, without paying your dues, you can not go into the gym [Select] <

Categorize each of the following five goods as a Private Good, Common Good, Club Good, or Public Good. Descriptions of each good will serve as hints. Remember, our textbook outlines only two types of goods, see the notes and lecture video for the other two types. a) An NPR (radio) signal which is available to everyone with a radio, whether or not they contribute, the signal does not diminish no matter how many people tune in. [Select] b) A new Ford truck this can only be purchased by one person, you can not drive it off the lot without paying for it. [Select] c) A subscription to Disney+ - you can not have a subscription without paying for it, purchasing a subscription does not lower the total number of subscriptions available. [Select] d) A fireworks show on the 4th of July - the fireworks are visible to everyone in the town, whether or not they contributed anything to the display, one person viewing the fireworks does not make them less visible for anyone else. [Select] e) A membership to 24 Hour Fitness - your membership does not reduce the number of memberships available, without paying your dues, you can not go into the gym [Select] <

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) Alpha, Beta and Gamma are consumers of a public good. The marginal benefit ($) of each unit of the public good is given by the following table. Public Good Alpha Beta Gamma 1st unit 8 10 12 2nd unit 4 8 3 3rd unit 2 5 0 4th unit 1 5 0 Suppose each unit of the public good costs $15. How many units of the public good would be optimal? Explain. (b) If the public good becomes a private good and the price drops to $8. The marginal benefits are the same as that given in (a). How many units of the private good would be purchased? Explain.
The local diner offers a meal combination consisting of an appetizer, a soup, a main course, and a dessert. There are 4 appetizers, 5 soups, 5 main courses, and 4 desserts. Your diet restricts you to choosing between a dessert and an appetizer. (You cannot have both.) Given this restriction, how many three-course meals are possible? --------------------------------------choices
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4. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the well-being of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is beneficial, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Shift one of the curves to reflect the presence of the externality. If there are external costs of production, then you should shift the supply curve to reflect the social costs of producing the good; similarly, if there are external benefits from production, then you should shift the demand curve to reflect the social benefits from consuming the good. PRICE (Dollars per unit) QUANTITY (Units) Supply Demand O Demand -- Supply ? With this type of externality, in the absence of government intervention,…
25. Solutions for information asymmetries include all of the following except: A) labeling requirements. B) Pigouvian taxes. C) deductibles. B) anti-lemon laws. 26. The Tragedy of the Commons occurs when there is a good that is: A) nonrivalrous and nonexcludable. C) rivalrous but nonexcludable. 27. In which of the following market structures is there only one buyer? A) Monopolistic competition. B) Oligopoly. C) Monopsony. D) Monopoly. 28. bank charges higher interest rates on mortgages and therefore only ends up with bad credit risks is an example of which phenomenon? A) Principal/Agent Problem. B) Adverse Selection. C) Monopsony. D) Moral Hazard. B nonrivalrous but excludable. B) rivalrous and excludable. Extra Credit: E constant-cost industry is one in which: A) a higher price per unit will not result in an increased output. B) if 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth. C) the demand curve and therefore the unit price and…
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)
1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good. ? PRICE (Dollars per unit) QUANTITY (Units) Supply Demand Demand Supply With this type of…
5. Suppose that on a campus, girls' demand for an air freshener is P 10 - Q, and boys' demand is P = 10 - Q. The supply for the air freshener is P = 5+Q. (a) Suppose that the air freshener is a private good. Write down the combined demand of girls and boys for the air freshener. What would be the equilibrium quantity of air freshener traded? at what price? (b) Now suppose that the air freshener is a public good. Write down the combined demand of girls and boys for the air freshener. What would be the equilibrium quantity of air freshener traded? at what price?
1: The main goal of transport economics is to improve: A) Production costs B) Travel efficiency C) Service quality D) Ticket prices
Consider the model of a rational consumer that cares about consumption of private goods and consumption of broadcast public television (a public good). Suppose that the total level of broadcast public television provided through voluntary contributions is 10 hours of programming. Then the government decides to raise money through a tax and provide 10 hours of programming to the public. What would we predict about crowd-out of voluntary contributions to broadcast public television when government does this? How would the answer change if consumers get warm glow utility from donating to broadcast public television in addition to utility from the public television itself? (Be specific.)
1. Working with Numbers and Graphs Q1 Suppose the marginal costs of reading are constant at $14 per hour, while the marginal benefits of reading decline (over time) as more reading is performed. In particular, suppose the following table contains the marginal benefit associated with various levels of hours spent reading. Time Spent Reading Marginal Benefits (Hours) (Dollars per hour) 10 16 40 4. Assume the marginal-benefit curve is a straight line through the two points described in the table. On the following graph, use the blue points (circle symbol) to plot the marginal-benefit curve for reading. Next, use the orange points (square symbol) to plot the marginal-cost curve for reading. Finally, use the black point (plus symbol) to indicate the point corresponding to the efficient amount of reading (that is, the point at which the net benefits of reading are maximized). MARGINAL COST, MARGINAL BENEFIT (S per hour of reading per week) 10 12 14 20 10 At any level of reading below the…
B. Let’s consider the market for flour in a different town. Assume that it is efficient (i.e. that there are not external costs to producing flour, and no external benefits from consuming it). Price ($/lb) Quantity Supplied (thousands of lbs per day) Quantity Demanded (thousands of lbs per day) 1.5 8 14 2 9 13 2.5 10 12 3 11 11 3.5 12 10 4 13 9 What is the price and quantity of flour sold without government intervention. Graph this equilibrium. XXXX 2. Suppose that, alarmed by the inability of many poorer consumers to buy flour, the government institutes a $2/lb price ceiling. How much flour will suppliers wish to sell, and how much will buyers demand? How much flour will actually be sold? Show this outcome on the same graph you drew for question 1. XXXX 3. Describe, in one sentence each, three problems that this policy might create? Please do not simply copy down phrases from the textbook, but instead describe ways that…