Exam 14: Public Goods and Tax Policy

The small city of Pleasantville is considering building a public swimming pool that costs $1,000. Each resident's marginal benefit of the swimming pool is shown below. It takes a 4/5 majority to pass any tax measure, and all residents must vote. Vater Marginal Benefit Kyle \ 420 Dylarn \ 360 Frar1 \ 350 Rorruie \ 190 Sarn \ 170   Dylan proposes that the city let a private company build the pool and charge residents a one-time fee to use the pool as much as they like. Only residents who pay the fee would be allowed to use the pool. If the private company were allowed to set a single fee, then:

It will be difficult to find a solution to the problems caused by greenhouse gas emissions because:

Some people oppose deficit spending because it:

The small city of Pleasantville is considering building a public swimming pool that costs $1,000. Each resident's marginal benefit of the swimming pool is shown below. It takes a 4/5 majority to pass any tax measure, and all residents must vote.   Vater Marginal Benefit Kyle \ 420 Dylarn \ 360 Frar1 \ 350 Rorruie \ 190 Sarn \ 170   Kyle proposes that the city auction the right to build the pool to the highest-bidding company.     The winning company would be able to charge residents a one-time fee to use the pool as much as they like, and only residents who pay the fee would be allowed to use the pool. If the private company could perfectly price discriminate, then:  

If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below. If the regulated pay-per-view charge to watch a fight were $15 per household, then ________ households would watch the fight, and the loss is total economic surplus would be ________ relative to when there is no charge to watch the fight.

According to the textbook, the private provision of television programming may not be socially optimal because:

Suppose that the marginal cost of providing public television to one more viewer is zero. If a public television station sets the price of public television equal to its marginal cost, then:

The small city of Pleasantville is considering building a public swimming pool that costs $1,000. Each resident's marginal benefit of the swimming pool is shown below. It takes a 4/5 majority to pass any tax measure, and all residents must vote. Vater Marginal Benefit Kyle \ 420 Dylarn \ 360 Frar1 \ 350 Rorruie \ 190 Sarn \ 170   If Fran proposes that the city build the pool and finance it with a $200 tax on each resident, then ________ residents will vote in favor of the proposal and ________ will vote against, so the proposal will ________.

Suppose the latest Hunger Games movie first played in theaters, where it sold out during its opening week. Several months later it was available on pay-per-view TV. Two years later it was shown on CBS, a broadcast television network. When the movie was playing in theaters, it was a ________ good; when it was available on pay-per-view TV, it was a ________ good; and when it was shown on CBS, it was a ________ good.

Will and Grace have adjoining unfenced back yards and each has just adopted a new puppy. Will values a fence between their yards at $250 and Grace values a fence between their yards at $200. The cost of building the fence is $300, which will be split equally if they both agree to build the fence. Therefore, their payoff matrix is as follows.   In the Nash equilibrium of this game:

Lane and Riley are the only two residents in a neighborhood, and they share the same driveway. They would like to have the driveway paved. The value of the paved driveway is $1,500 to Lane and $900 to Riley. Regardless of who pays for the paving both people will benefit from it.   If the cost of paving the driveway is $2,000, then it is ________ for the driveway to be paved because total economic surplus would ________.

If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below. If viewing a fight were free to anyone who tuned in, total economic surplus would be ________.

If voters A, B, and C have the following demand curves for a public library Pa = 5 - Q, Pb = 10 - 2Q, and Pc = 15 - 3Q, then social demand for a public library is:

Even if a tax imposed in a market generates a loss in surplus for the participants in that market, the tax could still increase economic efficiency if:

The current U.S. income tax system requires taxpayers to pay a higher marginal tax rate on higher levels of taxable income. Suppose that the tax rate is 10 percent on the first $15,000 of taxable income, 15 percent on the next $45,000 of taxable income, 30 percent on the next $60,000 of taxable income, and 35 percent on taxable income above $120,000. Suppose the tax code also includes provisions that allow taxpayers to reduce the income on which they are taxed, and that those provisions most often apply to the richest taxpayers. These provisions tend to make the tax code:

There are ten states in the democratic nation of Katlandia, and each state has ten thousand residents. Although incomes vary, each Katlandian pays a tax equal to the total cost of all government projects divided by the number of residents in the country. Currently, two states each have one army base. An army base adds $2 million to a state's local economy each year. In addition, in terms of increased security, the annual marginal benefit to Katlandia of having an additional army base is shown below. The total cost of an army base is $8 million per year. Taxes in Katlandia are:

National defense is an example of a good that is:

The development of pay-per-view technology:

The combination of pork barrel spending and logrolling leads to:

A swing at a popular, unfenced public park is: