When people decide to buy cars, they have to decide between fuel economy and other features. It is argued that there is a "public good" issue involved in this decision. Why might that be? How the existence of public-good characteristics affect the price of the car? Include in your answer a good definition of a public good and free riders.

When people decide to buy cars, they have to decide between fuel economy and other features. It is argued that there is a "public good" issue involved in this decision. Why might that be? How the existence of public-good characteristics affect the price of the car? Include in your answer a good definition of a public good and free riders.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section11.2: Public Goods

Problem 2QQ

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When people decide to buy cars, they have to decide between fuel economy and other features. It is argued that there is a "public good" issue involved in this decision. Why might that be? How the existence of public-good characteristics affect the price of the car? Include in your answer a good definition of a public good and free riders. Be complete and use the language of economics.
Considering the Human Right to Adequate Food, should “healthy” food be made available to all, free of charge, and funded by the government? Consider the nature of “public goods” and “private goods”, as well as “opportunity cost”, efficiency, equity, externalities, and markets.
What is the economist’s definition of public goods? Why are public goods associated with market failure? How do the free rider problem and shirking contribute to this form of market failure
There are three consumers of a public good. The demands for consumers are as follows: p1 = 50 − G, p2 = 110 − G, p3 = 150 − G, where G measures the number of units of the good and ?? the price in dollars. The marginal cost of the public good is $190. Explain why the public good may not be supplied at all because of the free-rider problem. If the public good is not supplied at all, what is the size of the deadweight loss arising from this market failure?
Suppose there are two residents in a neighborhood, and you know both of their demand curves for a public good. What would you have to do in order to figure out what the social demand curve? a-Subtract the demand of the person with the higher valuation of the public good from the demand of the person with the lower valuation of the public good b-Add their demand curves together c-Multiply the two demand curves together d-Subtract the demand of the person with the lower valuation of the public good from the demand of the person with the higher valuation of the public good
Which of the following does NOT describe the characteristics of public market? I. Opportunity cost in public market is zero. II. Only public market requires one to make choice. III. Public market depends on price mechanism in allocating resources. IV. All goods and services in public market are freely provided. a.I, II and III b.I, II and IV c.I, II, III and IV d.II, III and IV
What are the two essential characteristics of public goods? Choose the two characteristics that apply. A. Individuals pay for public goods as they are used. B. Some people receive greater opportunities to use public goods. C. Public goods can be used by more and more people at no additional opportunity cost and without depriving others of any of the goods or services. D. Collection systems are difficult to institute for public goods because of how people use them.
Answer the question based on the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. Q Pa Pb 1 $ 3 $ 5 2 2 4 3 1 3 4 0 2 5 0 1 The collective willingness of this society to pay for the fourth unit of this public good is Multiple Choice $4. $1. $2. $8. $6.
Which of the following statements is false regarding a public good? Multiple Choice The marginal cost of a public good is zero. A scholarship is an example of a public good. A public good is non-rival. A public good is non-excludable.
As it relates to a public good, nonrivalry means that: the public sector is able to provide the good profitably. there is no need or demand for the good. either the public sector or the public sector can produce the good, but not both. one person's benefit from the good does not reduce the benefit available to others.
What information do we need to find the optimal quantity of public goods? We may want to make the tax burden proportional to benefits from a public good. What problem might arise if we try this approach?
Use your demand schedule for a public good, determined in question 1, and the following supply schedule to ascertain the optimal quantity of this public good. Why is this the optimal quantity?