Exam 7: Public Goods

If government provision of a public good results in an equal reduction in the privately provided amount of that good,then:

Business improvement districts have tended to be effective when:

The three problems facing a government trying to determine the optimal quantity of a public good include all of the following EXCEPT:

Which of the following is a reason to be cautious about interpreting results from laboratory experiments in economics?

Assume private individuals are already providing some quantity of a public good in the absence of government intervention.If government begins to provide the public good,it is likely that:

Which activity is most consistent with altruism?

Health care reform implemented in Massachusetts in 2006 provides an example of:

The value of altruistic and communal behavior in society is:

What are the options available to government when deciding whether to rely on the private sector or the public sector to provide public goods? Use the example of prisons to illustrate.

If a good becomes less valuable as a result of one consumer's use of the good,but does not become worthless to other consumers,that good is:

Which action can be best described by the warm glow model?

Roads are typically viewed as a public good.However,some highways are financed by tolls levied on drivers instead of through taxes.Discuss why this model works for some roads and not others in terms of the properties of public goods.

Which factor is likely to prevent private market forces from providing the optimal amount of a public good?

Government may not be able to determine the optimal amount of a public good because:

Which of the following is TRUE when there is the socially optimal amount of a private good with no externality?

A road,which can be considered as nonexcludable but rival in consumption,is an example of:

Public goods:

In right-to-work states,the law allows people to opt out of joining a labor union and paying membership dues while still being covered by the collective bargaining agreement negotiated by the union.If the benefits of collective bargaining agreements are public goods,are these benefits likely to be underprovided in right-to-work states? Explain why or why not.

Suppose that Scott and Bob live on the same street.In the winter,both of them like their streets plowed.Bob's demand is given by Q = 40 - P,and Scott's demand is given by Q = 30 - 2P.Suppose that the marginal cost of plowing the snow is constant at $35. (a)What is the social marginal benefit curve? (b)What is the socially efficient amount of plowing that should be done? (c)What would be the socially efficient amount of plowing if the marginal cost of plowing were $5?

Suppose that two individuals,Jon and David,form a community and would like to construct a communal fort that would protect them from attacks.They both consume good X,a private good,and the protection of the fort,P.One unit of good X costs 1 unit of currency,and one unit of P costs 2 units of currency.Both Jon and David have an income of 100 and a utility function of the form: U = log(X_i)+ 2 × log(P_J + P_D) The budget constraint for each is given by: X_i + 2 × P_i = 100 (a)Find the amount of protection Jon will provide as a function of how much David provides,and explain why the relationship is the way it is. (b)How much protection P will be privately provided in this case? (c)Explain the economic intuition behind this amount,and compare it to the socially optimal amount without solving for the socially optimal amount.