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MICROECONOMICS FOR TODAY (LL)-W/MINDTAP
10th Edition
ISBN: 9781337739115
Author: Tucker
Publisher: CENGAGE L
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Chapter 14, Problem 6SQ
To determine
The maximizing social welfare output.
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What is the efficiency condition for public goods provision? (i.e. When this condition holds, the amount of public goods provision is optimal.)
a. The marginal benefit of each individual is equal to the marginal cost of production.
b. The sum of all individuals' marginal benefit equals the marginal cost of production
The costs or benefits of a market activity that affect a third party are called:
A) externalities.
B) public goods.
C) common resource goods.
D) artificially scarce (or club) goods.
Suppose a service is currently produced by perfectly competitive private firms. That good has the characteristics of a public good. It will be produced in quantities that are:
a. too large for allocative efficiency.b. too small for allocative efficiency.c. exactly the amount that is allocatively efficient.d. in the right amounts, but of lower quality.
Chapter 14 Solutions
MICROECONOMICS FOR TODAY (LL)-W/MINDTAP
Ch. 14.2 - Prob. 1.1GECh. 14.2 - Prob. 1.2GECh. 14.2 - Prob. 1.3GECh. 14.2 - Prob. 2.1GECh. 14.2 - Prob. 2.2GECh. 14.2 - Prob. 2.3GECh. 14.2 - Prob. 2.4GECh. 14 - Prob. 1SQPCh. 14 - Prob. 2SQPCh. 14 - Prob. 3SQP
Ch. 14 - Prob. 4SQPCh. 14 - Prob. 5SQPCh. 14 - Prob. 6SQPCh. 14 - Prob. 7SQPCh. 14 - California once proposed legislation that would...Ch. 14 - Prob. 9SQPCh. 14 - Prob. 10SQPCh. 14 - Prob. 11SQPCh. 14 - Prob. 12SQPCh. 14 - Prob. 13SQPCh. 14 - Prob. 14SQPCh. 14 - Prob. 15SQPCh. 14 - Prob. 16SQPCh. 14 - Prob. 1SQCh. 14 - Prob. 2SQCh. 14 - Prob. 3SQCh. 14 - Prob. 4SQCh. 14 - The perfectly competitive profit-maximizing firm...Ch. 14 - Prob. 6SQCh. 14 - Prob. 7SQCh. 14 - Prob. 8SQCh. 14 - Prob. 9SQCh. 14 - Prob. 10SQCh. 14 - Prob. 11SQCh. 14 - Prob. 12SQCh. 14 - Prob. 13SQCh. 14 - Prob. 14SQCh. 14 - Prob. 15SQCh. 14 - Prob. 16SQCh. 14 - Prob. 17SQCh. 14 - Prob. 18SQCh. 14 - Prob. 19SQCh. 14 - Prob. 20SQ
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- Describe why competitive market can be failed due to the presence of the public goods.arrow_forwardThe town of Musicville has two residents: Bach and Mozart. The town currently funds its free outdoor concert series solely from the individual contributions of these residents. Each of the two residents has a utility function over private goods (X) and total concerts (C), of the form U = 3 x log(X) + 2 × log(C). The total number of concerts given, C, is the sum of the number paid for by each of the two persons: C = CB + CM. Bach and Mozart both have income of 80, and the price of both the private good and a concert is 1. Thus, they are limited to providing between 0 and 50 concerts. a. How many concerts are given if the government does not intervene?arrow_forwardPlease solve part d,e and f!!! Three roommates, Jim, Saleem, and Ritesh, are thinking about buying a new speaker system for their apartment. The speaker system would be a public good if they buy them, and the total cost would be $300 which would be shared equally among the three. Jim values it at $80, Saleem values it at $140, and Ritesh values it at $70. If the speakers are purchased each person gets a payoff equal to their net valuation (valuation minus cost share); if they are not purchased each gets zero payoff. a)Is it socially efficient that they buy the speaker system? With reference to the definition of a public good, why or why not? The roommates decide that they will write down their net valuations, and if these reports sum to more than zero, they will buy the TV (sharing the cost equally), or else they will not. b) If all were to report their true valuations, what payoff would each agent earn? c) Show that if Jim and Ritesh submit their true net valuation, then Saleem does…arrow_forward
- The over-allocation or over production of goods and services leads to market failure and unsustainable development.What is an appropriate diagram to represent this statement?arrow_forwardThe socially optimal outcome is the outcome that: Select one: a. has the most externalities. b. is most efficient for society as a whole, including for buyers, sellers, and bystanders. c. has the most benefits for society as a whole, regardless of the costs involved. d. benefits the largest number of people.arrow_forward1. The U.S. economy and technology are two primary external environmental elements that drive a hypercompetitive environment. True False 2. The five forces model indicates that firms can produce above average returns for all of the following except: Group of answer choices a. all of the above are indicators of above-average returns b. by producing standardized goods or services at a cost below those of competitors c. when firms can study the external environment to identify an attractive industry d. by producing standardized goods or services which customers are willing to pay premium prices 3. Firms can increase competitive rivalry and build barriers to entry by forming joint ventures. Group of answer choices a. True b. False 4. Apple’s research and development function has the ability to produce innovative new products that are perceived as valuable in the marketplace. This is an example of Apple’s Group of answer choices a. A tangible resource b. core competency c. An intangible…arrow_forward
- A3) Consider production involving a positive extemality. Which one of the following statements is true? a) Without government intervention the market will produce excess supply. b) Marginal social cost is higher than marginal private cost. e) Marginal social benefit is less than marginal private benefit. d) A subsidy to producers could increase production to the socially optimum level. e) A Pigouvian tax could be imposed on the producer to achieve the socially optimum level of production.arrow_forwardQuestions 12 & 13 relate to the following graph: $ P3 P₂ 12 13 P₁ The graph best represents: Q₁ Qo a. Negative production externality b. Positive production externality c. Negative consumption externality d. Positive consumption externality According to the graph, which price and quantity combination represents the social optimum? a. P₁, Q₁ b. P₂, Q₁ C. P₁, Qo d. P₂, Qo Social Cost A A Private Cost Demand Quantity B B D C Darrow_forwardWhich of the following represents a social benefit? Group of answer choices The satisfaction of eating a strawberry ice cream. The total revenue a company gains from developing a new vaccine. All of the positive externalities from the invention of the laser All of the positive externalities a company receives from the implementation of a new technology that decreases the cost of production.arrow_forward
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