Principles Of Economics, Student Value Edition
Principles Of Economics, Student Value Edition
12th Edition
ISBN: 9780134079288
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: Prentice Hall
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Chapter 16, Problem 2.1P
To determine

Which of the statement is more persuasive about public goods and controlling of the market failure.

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The accompanying table relating to a public good provides information on the prices Young and Zorn are willing to pay for various quantities of that public good. These two people are the only members of society. Determine the price that society is willing to pay for the public good at each quantity of output. If the government’s marginal cost of providing this public good is constant at $7, how many units of the public good should government provide? Why not less? Why not more?
Define a public good and, using a graph, explain the equilibrium of a pure public good.
Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy. Which of the following describes why most economists would disagree with her statement?  A corrective tax would result in a more efficient outcome than either tradable permits or government regulation would.    A free market in tradable pollution permits is typically more efficient than government regulation.    Clean air is a fundamental right, and government regulation will allow too much pollution.    The environment is so important that it should be protected as much as possible, regardless of the cost.
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