Exam 17: Public Goods Common Resources

Some public goods would not be provided without government intervention because:

Which of the following is a common resource?

Use the following to answer questions: Figure: An Individual's Marginal Benefit from a Public Good -(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $24, how many units of this public good would maximize society's welfare?

Use the following to answer questions: Figure: Demand and Marginal Revenue -(Figure: Demand and Marginal Revenue) The figure Demand and Marginal Revenue refers to a software upgrade. The producer incurred fixed costs of $10 million to produce the upgrade; the marginal cost of allowing consumers to download the upgrade is zero. What is the efficient level of output for the upgrade?

Which of the following goods is most likely an artificially scarce good?

Use the following to answer questions: Figure: Market Failure -(Figure: Market Failure) In the figure Market Failure, if production in this competitive market is at quantity F:

Use the following to answer questions: Figure: Market Failure -(Figure: Market Failure) In the figure Market Failure, the equilibrium price is _____ and the equilibrium quantity is _____ for a competitive market.

Use the following to answer questions: Figure: Market Failure -(Figure: Market Failure) Look at the figure Market Failure. Suppose the supply curve represents the marginal cost of providing streetlights in a neighborhood that is composed of two people, Ann and Joe. Suppose the supply curve represents the marginal cost of providing streetlights in a neighborhood that is composed of two people, Ann and Joe. The demand curve represents the marginal benefit that Ann receives from the streetlights. Suppose that Joe's marginal benefit from the streetlights is a constant amount equal to AC. How much is Ann willing to pay for G streetlights?

The tendency of people or firms to consume a public good without paying for it is called the _____ problem.

Pharmaceutical companies typically face very high fixed costs when developing new drugs. The marginal cost of producing a drug after development is very low. When these companies set price and output to maximize profit, patients pay a _____ price for _____ amounts of the drug than are socially optimal.

For which of the following goods is the marginal social benefit necessarily greater than the marginal private benefit?

Use the following to answer questions: Figure: Market Failure -(Figure: Market Failure) Look at the figure Market Failure. Suppose the supply curve represents the marginal cost of providing streetlights in a neighborhood that is composed of two people, Ann and Joe. The demand curve represents the marginal benefit that Ann receives from the streetlights. Suppose that Joe's marginal benefit from the streetlights is a constant amount equal to AC. Providing F streetlights is _____ because the marginal social benefit is _____ the marginal cost.

In a market economy, goods that are nonexcludable and nonrival will be produced at inefficiently low levels (if they are produced at all), and goods that are excludable but nonrival in consumption will be produced at inefficiently low consumption levels.

A Pigouvian tax can lead to the efficient level of production and consumption of:

Use the following to answer questions: Scenario: Alexander and Vanessa Alexander and Vanessa benefit from scientific research. Alexander's marginal private benefit from such research is given by the equation P = 200 - Q, where Q refers to the amount of research undertaken and P is the price Alexander is willing to pay for such research. Vanessa's marginal private benefit from such research is given by the equation P = 100 - Q. The marginal social cost of engaging in such research is constant at $100. -(Scenario: Alexander and Vanessa) Refer to the scenario Alexander and Vanessa. If the socially optimal level of scientific research is produced and if both Vanessa and Alexander are truthful in disclosing the marginal private benefits they expect to receive from this research, what is the price per unit of research that Vanessa is willing to pay?

The best example of an artificially scarce good is:

Which of the following are used to provide public goods? I. voluntary contributions II) taxes III) self-interested business firms

Use the following to answer questions: Figure: An Individual's Marginal Benefit from a Public Good -(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $8, how many units of the public good will be provided by the private market?

An example of a common resource is:

Use the following to answer questions: Figure: Traffic Lights in Plymouth -(Figure: Traffic Lights in Plymouth) Look at the figure Traffic Lights in Plymouth. Plymouth has 1,000 residents. Each of the residents has the same individual marginal benefit per traffic light. Without government intervention, the town will have _____ traffic lights.