The cost (supply) of each "unit" of NPR (National Public Radio) is P=9, Derek's valuation for each unit of NPR (demand) is given by Pp=20-2Q, and Kim's valuation is given by Pk=10-Q. The social valuation of NPR is Ps= Q. The socially optimal amount of NPR is units. Without intervention, the private market would lead to an • of NPR. Suppose the government decides to subsidize NPR in order to achieve the socially optimal amount of NPR. The total demand function is Q= P.
The cost (supply) of each "unit" of NPR (National Public Radio) is P=9, Derek's valuation for each unit of NPR (demand) is given by Pp=20-2Q, and Kim's valuation is given by Pk=10-Q. The social valuation of NPR is Ps= Q. The socially optimal amount of NPR is units. Without intervention, the private market would lead to an • of NPR. Suppose the government decides to subsidize NPR in order to achieve the socially optimal amount of NPR. The total demand function is Q= P.
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
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Without intervention, the private market would lead to an (efficient allocation, over-provision, or under-provision) of NPR.
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