PRINCIPLES OF ECONOMICS
14th Edition
ISBN: 2810015433483
Author: OpenStax
Publisher: OpenStax
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Textbook Question
Chapter 13, Problem 3SCQ
The Gizmo Company is planning to develop new household gadgets. Table 13.4 shows the company’s demand for financial capital for research and development of these gadgets, based on expected
- If the going interest rate is
- Assume that the interest rate is still
How much will the firm invest if it also receives the social benefits of its investment? (Add an additional
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Kenji and Paolo are considering contributing toward the creation of a building mural. Each can choose whether to contribute $300 to the building mural or to keep that $300 for a new suit.
Since a building mural is a public good, both Kenji and Paolo will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.70 of benefit. For example, if both Kenji and Paolo choose to contribute, then a total of $600 would be contributed to the building mural. So, Kenji and Paolo would each receive $420 of benefit from the building mural, and their combined benefit would be $840. This is shown in the upper left cell of the first table.
Since a new suit is a private good, if Kenji chooses to spend $300 on a new suit, Kenji would get $300 of benefit from the new suit and Paolo wouldn't receive any benefit from Kenji's choice. If Kenji still spends $300 on a new suit and Paolo chooses to contribute $300 to the…
Juanita and Neha are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a weekend getaway.
Since a water fountain is a public good, both Juanita and Neha will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.70 of benefit. For example, if both Juanita and Neha choose to contribute, then a total of $600 would be contributed to the water fountain. So, Juanita and Neha would each receive $420 of benefit from the water fountain, and their combined benefit would be $840. This is shown in the upper left cell of the first table.
Since a weekend getaway is a private good, if Juanita chooses to spend $300 on a weekend getaway, Juanita would get $300 of benefit from the weekend getaway and Neha wouldn't receive any benefit from Juanita's choice. If Juanita still spends $300 on a weekend getaway…
Construct a production possibilities curve for a hypothetical country. Put public capital goods per year on the vertical axis and consumer goods per year on the horizontal axis. Not shown directly in your graph, assume that this country produces just enough private capital per year to replace its depreciated capital. Assume further that this country is without public capital and is operating at point A where consumer goods are at a maximum. Based on the above research and using a production possibilities curve, show and explain what happens to this country’s private capital, production possibilities curve, and standard of living if it increases its output of public capital.
Chapter 13 Solutions
PRINCIPLES OF ECONOMICS
Ch. 13 - Do market demand curves reflect positive...Ch. 13 - Suppose that Sonys R. Is this a private or social...Ch. 13 - The Gizmo Company is planning to develop new...Ch. 13 - The Junkbuyers Company travels from home to home,...Ch. 13 - When residents in a neighborhood tidy it and keep...Ch. 13 - Education provides both private benefits to those...Ch. 13 - Which of the following goods or services are...Ch. 13 - Are the following goods non-rival in consumption?...Ch. 13 - In what ways (it) company investments in research...Ch. 13 - Will the demand for borrowing and investing in R&D...
Ch. 13 - Why might private markets tend to provide too few...Ch. 13 - What can government do to encourage the...Ch. 13 - What are the two key characteristics of public...Ch. 13 - Name two public goods and explain why they are...Ch. 13 - What is the free rider problem?Ch. 13 - Explain why the federal government funds national...Ch. 13 - Call a company be guaranteed all of the Social...Ch. 13 - Is it inevitable that government must become...Ch. 13 - How do public television stations, like PBS, try...Ch. 13 - Why is a football game on ESPN a quasi-public good...Ch. 13 - Provide two examples of goods/services that are...Ch. 13 - Radio stations, tornado sirens, light houses, and...Ch. 13 - HighFlyer Airlines wants to build new airplanes...Ch. 13 - Assume that the marginal private costs of a film...Ch. 13 - Becky and Sarah are sisters 1who share a room....
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