Chapter 5, Problem 5.4SC

To determine

Cost-benefit analysis of public goods by the users or the public.

Concept Introduction:

Public goods- Public goods are collective and social want satisfying goods whose consumption is externalized. These goods are characterized by non-rival consumption, non-exclusion and zero marginal costs of production. These are the collective social goods which cannot be defined in units and are thus indivisible. Examples- Medicare, National defense, education, flood control etc.

Medicare- It is a federal insurance program for the Americans with an age of 65 years and above funded by the Social Security Administration. These funds, however, come from the share of the earnings of the public paid to Federal Insurance Contributions Act (FICA)