ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 5RQ
To determine
The provision of public and private goods.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A strategy for consumer 1 in the private provision of public goods model is:
A quantity of public good purchases for each level of public good purchases of consumer 2.
A quantity of public good purchases.
A quantity of public good purchases that maximises 1's utility for each level of public good purchases of consumer 2.
The total quantity of public goods consumed by consumer 1.
O O O O
PRICE (Dollars per unit of electric cars)
500
450
400
350
300
250
200
150
100
50
0
H
0
O
□
1
0
■
The market equilibrium quantity is
O
3
5
QUANTITY (Units of electric cars)
☐ Supply
(Private Cost)
6
Demand
(Private Value)
Social Cost
units of electric cars, but the socially optimal quantity of electric car production is
To create an incentive for the firm to produce the socially optimal quantity of electric cars, the government could impose a
per unit of electric cars.
units.
of 1
3. Voluntary contributions toward a public good
Eleanor and Kyoko are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or
to keep that $400 for a cell phone.
Since a public park is a public good, both Eleanor and Kyoko will benefit from any contributions made by the other person. Specifically, every dollar
that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Eleanor and Kyoko choose to contribute, then a total
of $800 would be contributed to the public park. So, Eleanor and Kyoko would each receive $640 of benefit from the public park, and their combined
benefit would be $1,280. This is shown in the upper left cell of the first table.
Since a cell phone is a private good, if Eleanor chooses to spend $400 on a cell phone, Eleanor would get $400 of benefit from the cell phone and
Kyoko wouldn't receive any benefit from Eleanor's choice. If Eleanor still spends $400 on…
Chapter 4 Solutions
ECONOMICS W/CONNECT+20 >C<
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
Knowledge Booster
Similar questions
- PRICE (Dollars per unit of electricity) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 0 O E 1 O ☐ O ☐ 3 ■ The market equilibrium quantity is O 2 4 5 QUANTITY (Units of electricity) ☐ 0 Supply 6 (Private Cost) Demand (Private Value) 7 Social Cost (?) units of electricity, but the socially optimal quantity of electricity production is To create an incentive for the firm to produce the socially optimal quantity of electricity, the government could impose a unit of electricity. units. of $ perarrow_forward1. Chapter 4 Market Failure Caused by Externalities Page 94 Problem 1 Draw a supply and demand graph and identify the areas of consumer surplus and producer surplus. Given the demand curve, how will an increase in supply affect the amount of surplus shown in your diagram ? Explain. LO4.1 (Differentiate between demand-side market failures and supply-side market failures.arrow_forward-- 49. Table 11-4 There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners - Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. Adams Chen $100 First tree Second tree Third tree Fourth tree A. 3 B. 2 C. 1 50 D. 4 20 10 Benitez $115 110 100 50 $120 110 80 40 Davis $90 Refer to Table 11-4. Suppose the cost to plant each tree is $90. How many trees should be planted to maximize the total surplus of the four homeowners? 50 30 Oarrow_forward
- Suppose the equation for the demand curve in a market is P=100 – 2Q. Also, suppose the equation for the supply curve in the same market is P=10+3Q. Suppose there is an external cost of $20 associated with the production of each unit of the good. The socially optimal quantity is O 4 units smaller than the market equilibrium quantity. O 22 units greater than the market equilibrium quantity O 14 units smaller than the market equilibrium quantity O 4 units greater than the market equilibrium quantity.arrow_forwardLO 18.2] 3. The weekly supply and demand for packs of cigarettes in Carcinia is given in Figure 18P-1. [ a. Suppose cigarette smoking causes a $6/pack external cost on non-smokers. Draw the demand curve that would exist if the externality associated with smoking were internalized by consumers. b. How many packs of cigarettes are consumed per week? c. What is the efficient number of cigarette packs? d. What would be the total gain in surplus if this externality could be internalized? FIGURE 18P-1 Price ($) CHECHENNAKKA208642 36 34 32 30 18 16 14 12 10 S D 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Packs of cigarettes (millions) IN-CLASS ACTIVITY 5arrow_forwardConsider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The following table shows each resident's willingness to pay for each acre of the park. Acres 1 2 3 4 5 6 7 Sophia 0 acres O1 acre 2 acres 10 8 6 3 1 O3 acres 0 Willingness to Pay (Dollars) Amber Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the largest park size for which the majority of residents would vote "yes?" 24 18 14 8 6 4 2 Cedric 6 5 4 3 2 1 0arrow_forward
- 3. Suppose the production possibility frontier for an economy that produces one public good (y) and one private good (x) is given by x*+100y =5,000 This economy is populated by 100 identical individuals, each with a utility function of the form Utility = (x,y)2 where x,is the individual's share of private good production (=x/100). Notice that the public good is nonexclusive and that everyone benefits equally from its level of production. a. If the market for x and y were perfectly competitive, what levels of those goods would be produced? What would the typical individual's utility be in this situation? b. What are the optimal production levels for x and y? What would the typical individual's utility level be? (Hint: The numbers in this problem do not come out evenly, and some approximations should suffice.)arrow_forward3. Voluntary contributions toward a public good Clancy and Hubert are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $400 to the water fountain or to keep that $400 for a cell phone. Since a water fountain is a public good, both Clancy and Hubert will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Clancy and Hubert choose to contribute, then a total of $800 would be contributed to the water fountain. So, Clancy and Hubert would each receive $640 of benefit from the water fountain, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a cell phone is a private good, if Clancy chooses to spend $400 on a cell phone, Clancy would get $400 of benefit from the cell phone and Hubert wouldn't receive any benefit from Clancy's choice. If Clancy still…arrow_forward7....arrow_forward
- Acres 1 2 3 4 5 6 7 -$5 -$2 $0 F $2 Sophia $10 8 6 3 1 0 0 Amber $24 18 14 8 6 4 2 Cedric $6 5 4 3 2 1 0 Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equal. If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Sophia receive? 900127353arrow_forward7arrow_forward3. Voluntary contributions toward a public good Kyoko and Rina are considering contributing toward the creation of a public park. Each can choose whether to contribute $300 to the public park or to keep that $300 for a weekend getaway. Since a public park is a public good, both Kyoko and Rina will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.90 of benefit. For example, if both Kyoko and Rina choose to contribute, then a total of $600 would be contributed to the public park. So, Kyoko and Rina would each receive $540 of benefit from the public park, and their combined benefit would be $1,080. This is shown in the upper left cell of the first table. Since a weekend getaway is a private good, if Kyoko chooses to spend $300 on a weekend getaway, Kyoko would get $300 of benefit from the weekend getaway and Rina wouldn't receive any benefit from Kyoko's choice. If Kyoko still spends $300 on…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
