Consider the file named Public Goods Graphs. It shows the marginal private benefits (MPB) derived by three citizens from different units of a public good such as a fire station, another military base, or a new freeway. It also shows the marginal social costs of building these goods. Suppose that when the government employees survey the citizens about their preferences for the public good, every citizen understates his or her marginal private benefit for every unit of the good by $20. If the government builds the number of public goods indicated by the survey (believing that that is allocatively efficient), the deadweight loss arising from this policy will equal dollars. For this question, don't use the geometric formula to calculate the area. Just add the differences between the true marginal social benefits and the marginal social costs for different units. Use our general rounding rule.

Consider the file named Public Goods Graphs. It shows the marginal private benefits (MPB) derived by three citizens from different units of a public good such as a fire station, another military base, or a new freeway. It also shows the marginal social costs of building these goods. Suppose that when the government employees survey the citizens about their preferences for the public good, every citizen understates his or her marginal private benefit for every unit of the good by $20. If the government builds the number of public goods indicated by the survey (believing that that is allocatively efficient), the deadweight loss arising from this policy will equal dollars. For this question, don't use the geometric formula to calculate the area. Just add the differences between the true marginal social benefits and the marginal social costs for different units. Use our general rounding rule.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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