Homework Answers
A public good is defined to be non-exclusive and non-rival. A good is non-exclusive if people can not be excluded from consuming. Also, a good is non-rival if the provision of the good to an additional consumer has a marginal cost of zero. One of the problem related to the provision of public good is the existence of freeriders, i.e., consumer who do not pay for a non-exclusive good and still benefit from its existence. Due to thier presence, markets fail and it is difficult to provide public goods through market mechanism.
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Module 15: The following paragraph concerns questions 46 to 49. A public good is defined to...
69. Which of the following is the best example of a public good? a. Music downloads...
69. Which of the following is the best example of a public good? a. Music downloads b. Designer clothes c. Natural forests d. National defense 70. A street light is a ________. a. common pool resource good b. club good c. private good d. public good 71. A congested street is ________ in consumption. a. non-excludable but rival b. non-excludable and non-rival c. excludable but non-rival d. excludable and rival 72. The free-rider problem exists for goods that are ________....
1)Which of the following will result in the most deadweight loss? A.a natural monopoly regulated with...
1)Which of the following will result in the most deadweight loss? A.a natural monopoly regulated with average cost pricing B.a natural monopoly regulated with average variable cost pricing C.an unregulated natural monopoly D.a natural monopoly regulated with marginal cost pricing 2)A good or service or a resource is nonexcludable if A.it is not possible to prevent someone from benefiting from it. B.it is possible to prevent someone from enjoying its benefits. C.its use by one person decreases the quantity available...
33. In the long run, firms in a monopolistically competitive market structure a. earn zero economic...
33. In the long run, firms in a monopolistically competitive market structure a. earn zero economic profit. b. produce an output level where price = marginal cost. c. do not produce output at minimum average cost. d. produce an output level where marginal revenue = marginal cost. e. a, c, and d are true 34. Externalities a. never occur when markets are perfectly competitive. b. are fully reflected in market prices. c. are reflected in the final price of goods...
8. Which of the following is an example of a market failure? a) some goods are...
8. Which of the following is an example of a market failure? a) some goods are public (non-excludable and non-rival). b) market activities have externalities. c) insurers cannot distinguish customers who are good risks and bad risks. d) all of the above The free-rider problem means a) people will not consume a public good unless it is free. b) it is efficient to provide a public good for free." c) people treat a public good as if it were free....
1. If you can prevent someone from consuming a good, that good is called A. nonrival....
1. If you can prevent someone from consuming a good, that good is called A. nonrival. B. rival. C. excludable. D. a public good. E. nonexcludable. 2. To hunters, deer in the woods are an example of a A. private good. B. natural monopoly. C. public good. D. common resource. E. public resource. 3. _________ are public goods. If bureaucrats want to ensure the efficient quantity is produced, _______. A. Factories; marginal social cost must be greater than marginal cost....
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. The environmental damages caused by throwing away the coffee pods is an example of a: a Positive externality (6. Negative externality c. Private cost d. Private benefit Consider the market for coffee in the graph to the right. 1. Left unregulated, what...
12. A "mixed" public good is one which a) has the properties of both private and public goods. b) is provided by both t...
12. A "mixed" public good is one which a) has the properties of both private and public goods. b) is provided by both the government and private firms. c) is valued differently by different people. d) None of the above. 13. It is inefficient to charge a price for a non-rival good because a) the marginal cost of the good is zero. b) the marginal cost of an additional consumer is zero. c) the marginal willingness to pay of an...
Paragraph Styles Unit 8 - Market Failures: Externalities, public goods, natural resources The production of coffee...
Paragraph Styles Unit 8 - Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. MSC MPC The environmental damages caused by throwing away the coffee pods is an example of a:1 Vertical (Value) Axis Major Gridlines a. Positive externality b. Negative externality c. Private costs d. Private benefits Consider the market for coffee...
Problem 3: Public Goods sumers, Ben and Joe. There is public good in this economy in...
Problem 3: Public Goods sumers, Ben and Joe. There is public good in this economy in a P 10- Q, and Joe's demand sirens in the markets is form of tornado sirens. Ben's demand for tornado sirens is given by raso sirens in the markets is for tornado sirens is P 8 2Q. Marginal cost for providing torna constant, MC 9. a) Are tornado sirens non-exclusive? Explain your answer. Is there a potential for free-rider problem? Derive market demand curve...
47. Why must profits be zero in long-run competitive equilibrium a. If profits are not zero,...
47. Why must profits be zero in long-run competitive equilibrium a. If profits are not zero, firms will produce higher-quality goods. b. If profits are not zero, marginal revenue will rise. c. If profits are not zero, marginal cost will rise. d. If profits are not zero, firms will enter or exit the industry. 48. Resource allocative efficiency occurs when a firm a. minimizes costs of production yet charges the highest possible price. b. produces the quantity of output at...
8. Which of the following is an example of a market failure? a) some goods are public (non-excludable and non-rival). b) market activities have externalities. c) insurers cannot distinguish customers who are good risks and bad risks. d) all of the above The free-rider problem means a) people will not consume a public good unless it is free. b) it is efficient to provide a public good for free." c) people treat a public good as if it were free....
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. The environmental damages caused by throwing away the coffee pods is an example of a: a Positive externality (6. Negative externality c. Private cost d. Private benefit Consider the market for coffee in the graph to the right. 1. Left unregulated, what...
12. A "mixed" public good is one which a) has the properties of both private and public goods. b) is provided by both the government and private firms. c) is valued differently by different people. d) None of the above. 13. It is inefficient to charge a price for a non-rival good because a) the marginal cost of the good is zero. b) the marginal cost of an additional consumer is zero. c) the marginal willingness to pay of an...
Paragraph Styles Unit 8 - Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. MSC MPC The environmental damages caused by throwing away the coffee pods is an example of a:1 Vertical (Value) Axis Major Gridlines a. Positive externality b. Negative externality c. Private costs d. Private benefits Consider the market for coffee...
Problem 3: Public Goods sumers, Ben and Joe. There is public good in this economy in a P 10- Q, and Joe's demand sirens in the markets is form of tornado sirens. Ben's demand for tornado sirens is given by raso sirens in the markets is for tornado sirens is P 8 2Q. Marginal cost for providing torna constant, MC 9. a) Are tornado sirens non-exclusive? Explain your answer. Is there a potential for free-rider problem? Derive market demand curve...
47. Why must profits be zero in long-run competitive equilibrium a. If profits are not zero, firms will produce higher-quality goods. b. If profits are not zero, marginal revenue will rise. c. If profits are not zero, marginal cost will rise. d. If profits are not zero, firms will enter or exit the industry. 48. Resource allocative efficiency occurs when a firm a. minimizes costs of production yet charges the highest possible price. b. produces the quantity of output at...
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