Macroeconomics
11th Edition
ISBN: 9781260506891
Author: Colander
Publisher: MCG
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Question
Chapter 5, Problem 1IP
(a)
To determine
Value of airways.
(b)
To determine
Broadcaster and the production of HD televisions.
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Question
Consider two individuals, Adam and Eve, who have the following in-verse demand curves and face a marginal cost curve below.
PA = 100 1/2 Qa; PE = 200 Qe
MC = 2/3 Q
(a) If the good is private, what is the equilibrium price and quantity in a competitive market? Is this outcome ecient?
(b) If the good is public, ecient provision implies what price and quantity in the market?
How do public television stations, like PBS, try to overcome the free rider problem? Define the problem, and then discuss the solutions.
[Be sure to explain, what you mean by public good, and what is the free rider problem. Then use the explanation to apply to the public television situations]
Is it in the public interest to tax cigarettes? Explain your position using some of the economic concepts or graphs.
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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Similar questions
- Why is a football game on ESPN a quasi-public good but a game on the NBC, CBS, or ABC is a public good? How are over-the-air broadcasters (NBC, CBS, ABC) able to overcome the free rider problem?arrow_forwardMr. Saeed Ahmed loves watching sports channel on his local public TV station, but he never sends any money to support the station during its fund-raising drives. What name do economists have for people like Mr. Saeed Ahmed? b. How can the government solve the problem caused by people like Mr. Saeed Ahmed? c. Can you think of ways the private market can solve this problem? How does the existence of cable TV alter the situation?arrow_forwardAdam Smith’s theory of the invisible hand is often used to justify a hands-off approach to market activity. Can you give an example where government intervention in a market led to an inefficient outcome? How about an example where government intervention improved the outcome?arrow_forward
- Roommates D, E and F can buy paintings at $30 each for their dorms. Marginal benefits are MB of D = 100 - 2Q, MB of E = 200 - Q, MB of F = 300 - 2Q. a. What are the 2 properties of a public good? b. Explain the Free Rider problem. c. Aggregate the demand curves(vertical sum). d. Why are there kinks in the market demand curve? e. Calculate and illustrate the optimal quantity for this good? f. How should the costs of purchasing this quantity be allocated between the buyers?arrow_forwardHow do property rights affect externalities and market failure? Do goods and services by definition have to be considered a property right? Are there any examples in which that may not be the case?arrow_forwardThere are two common problems in markets (sometimes described as market failures). For each problem listed below answer the following questions: <Tragedy of the Commons><Free-Rider Problem> (a) Does this problem appear in the market for public, private, common-pool or club goods?(b) Is the problem because the good is non-rival in use and/or because the good is non-excludable?(c) Can this problem be resolved? If so, how? If not, why not?(d) Please give an example of the type of good or market in which this problem appears.arrow_forward
- Market failure occurs when the private sector fails to distribute our resources efficiently through the pricing system. Externalities and a lack of public goods and services are two examples of market failure.Give an example of a positive and a negative externalities that someone faces in their life. Also, what are some public goods and services that you utilize in your everyday life?arrow_forwardWhat is an externality? How do they affect market efficiency? If an externality is present, where is the socially optimal point of production? Where will the market produce if there is no government intervention? How do we get from the private market equilibrium to the socially optimal one?arrow_forwardAnswer 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.arrow_forward
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