National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10-Q, and Kim's valuation is given by PK-4-0.25Q. The total social valuation (demand) of NPR is Ps= Q. The socially optimal amount of NPR is units. Without intervention, the private market would lead to an ◆ of NPR.

National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10-Q, and Kim's valuation is given by PK-4-0.25Q. The total social valuation (demand) of NPR is Ps= Q. The socially optimal amount of NPR is units. Without intervention, the private market would lead to an ◆ of NPR.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 2WNG

See similar textbooks

Similar questions

From an economic viewpoint, the optimal amount of pollution a. is zero because all pollution imposes costs on society. b. is that amount firms create when they maximize economic profits by setting their marginal private costs equal to market price. c. is that amount where the marginal social costs of producing a good precisely equals the price of the good. d. Both answers b. and c. are correct.
National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10–Q, and Kim's valuation is given by PK=4–0.25Q.The total social valuation (demand) of NPR is PS=Answer-AnswerQ.The socially optimal amount of NPR is Answer units. Without intervention, the private market would lead to an Answer of NPR.
Education confers many external benefits on society: a higher-paid workforce, more technological innovation, a more informed electorate, and so on. Therefore, the market equilibrium quantity of education is not equal to the socially optimal quantity. The following graph shows the demand for education (its private value), the supply of education (the private cost of producing it), and the social value of education, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.
Consider a public goods problem. Assume a community has 10 people each with: MBP = 10 – Q, where Q is equal to the quantity of the public good provided in the community. Assume no externality in public good production: MCP = MCS = 10. Assume a rich philanthropist offers to pay half the cost of every voluntary donation. Given this subsidy, the community will choose to donate ____ total units of Q with a deadweight lost of ____ ?
Military Defense is a public good. The cost (supply) of each "unit" of military defense is P=3. Kim's valuation for each unit of defense (demand) is given by PK=10–Q, and Derek's valuation is given by PD=5–0.5Q. The resulting social demand function is PS=15-1.5Q.What is the socially optimal allocation of military defense?