Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 11, Problem 3PA
Sub part (a):
To determine
The free rider problem.
Sub part (b):
To determine
The free rider problem.
Sub part (c):
To determine
The free rider problem.
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Mr. Saeed Ahmed loves watching sports channel on his local public TV station, but he never sends any money to support the station during its fund-raising drives.
What name do economists have for people like Mr. Saeed Ahmed?
b. How can the government solve the problem caused by people like Mr. Saeed Ahmed?
c. Can you think of ways the private market can solve this problem? How does the existence of cable TV alter the situation?
Fredo loves watching Downton Abbey on his localpublic TV station, but he never sends any money tosupport the station during its fund-raising drives.a. What name do economists have for people likeFredo?b. How can the government solve the problemcaused by people like Fredo?c. Can you think of ways the private market cansolve this problem? How does the option of cableTV alter the situation?
What 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?
Chapter 11 Solutions
Essentials of Economics (MindTap Course List)
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Similar questions
- What happens to the private benefit curve and the private cost curve?arrow_forwardThe south African government develops targets that pertain to healthcare and education. Which of the following statements explains why government provides these two goods? A. The benefit to society of healthcare and education is extremely low. B. The benefits that society receives from health care and education exceed those that accrue to an individual user. C . The government spends money on health care and education because they are public goods D. Health care and education only produce negative externalities.arrow_forwardCompare and contrast private and public goods. Give an example for each kind of good.arrow_forward
- Identify the characteristics of a public good. a. Why do public goods exist? b. What is the problem that comes about due to public goods? c. Which of the following are public goods: parks, police services, welfare payments to the poor, production of energy, space exploration? d. Briefly describe how the free rider problem can be overcome. e. Briefly explain why markets often have a difficult time producing public goods.arrow_forwardHow are public goods different from private goods?arrow_forwardChoose a good or service that you would like to see the government provide more funding towards. 1. Explain how this good or service might be considered a public good. 2. Explain how this good or service might be an example of a positive externality problem.arrow_forward
- Briefly define each of the following concepts.a. An in medias res cost-benefit analysis.b. The marginal excess tax burden.c. Allocative efficiency.d. A positive externality in production.e. A shadow price.arrow_forward#8. A party ends up spreading the coronavirus. Is that an externality? a. Yes, it is a negative externality b. Yes, it is a positive externality c. No, it is not an externalityarrow_forwardWhich of the following goods would be considered a pure public good? Select one: O O O CO a. National defense b. Cable TV c. Toll road d. Sports stadiumarrow_forward
- Briefly explain what is meant by the term "externality" and how it occurs. a. What are the two types of externalities? b.How does government fix both of these issues? c. Is government intervention necessary? Why or why not?arrow_forwardNext question Which of the following is an example of a positive externality? A. A lower inflation rate would benefit most consumers. B. Compulsory flu shots for all students prevents the spread of illness in the general public. C. Promoting generic drugs would benefit people. D. Singapore has adopted a comprehensive savings plan for all workers known as the Central Provident Fund.arrow_forwardWhich of the following is a positive externality from education? a.Better-educated people make their coworkers more productive. b.Better-educated people tend to earn higher wages. c.Better-educated people live longer than less educated people. d.Better-educated people are less likely to vote and participate in a democracy.arrow_forward
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