“A public good will always be under-provided in a free market.” Is this claim true, false or ambiguous? Justify your answer (please write as much as you can)
Answer- Market always fails to work efficiently in case of public goods due to some distinct characteristics of public good like non-rivalry and non-excludability. Non-rivalry of public good implies that when a good is consumed by one individual, it doesn’t reduce the amount available for others. It is freely available for all. E.g. benefiting from a road doesn’t reduce the road available for others. Another characteristics is non-excludability which means it is not possible to provide a public good without excluding others or wihtout it being possible for others to enjoy. For example, if you provide a street light, you protect everyone in the area from theifs and give light, (whether they contributed the expenditure or not). Since, government cannot exclude some portion of the society from enjoying a public good, efficiency cannot be reached. It also creates the problem of free rider. Free rider means, it is not possible to prevent anyone from enjoying a good, once it has been provided, whether they make payment for it or not. Therefore, there is no incentive among people to pay for the good because they can consume it anyway without paying for it. Ultimately, this will lead to either no good being provided or under-provided. Public goods creates social inefficiency.
“A public good will always be under-provided in a free market.” Is this claim true, false...
3, (15%) For each of the following, write either True or False, and justify your answer . Suppose that under a free market, the Total Surplus is $3 million. Under a price ceiling, the Total Surplus drops to $2 million. Therefore, the Deadweight Loss is $1 million Minimum wage causes a reduction in profits, an increase in prices, or a decrease in employment or hours worked. A price ceiling causes a drop in Consumer Surplus. The Deadweight Loss is the...
public goods: give an example of an under provided good, explain why it's under provided and how it can be corrected using policy tools.
7a. Show a market for a pure public good. Put a real world "title" on the market for a pure public good provided in the United States. 7b. Show an "external" market to the public good market and the positive externality effect in the market from the public good. Put a real world "title" on the market for a pure public good provided in the United States. 7a. Show a market for a pure public good. Put a real world...
3. True or False. Please tell whether each of the following statements is true or false and justify your answer in a few sentences. (a) “Free trade is always good and governments should not manage trade.” (b) “Vertical FDI and trade are substitutes, while horizontal FDI and trade are complements.” (c) An import quota cannot make a country better off. (d) Increasing returns to scale will lead to monopolies in world trade and therefore consumers will lose from trade.
Determine whether each of the following is TRUE (i.e. always true) or FALSE (i.e. not always true) Justify your answers! (c) 2n-1(222) (a) 2n2 + n-1-0(2n2 +n). (b) 2n2 + n-1-0(2n2 + 2n). Determine whether each of the following is TRUE (i.e. always true) or FALSE (i.e. not always true) Justify your answers! (c) 2n-1(222) (a) 2n2 + n-1-0(2n2 +n). (b) 2n2 + n-1-0(2n2 + 2n).
True or False 1. Public goods are provided by the government or not at all. The second largest source of tax revenue for the federal government is social insurance taxes (Social Security and Medicare taxes). Other things equal, an economy's marginal willingness to pay for a non-rival good is likely to be higher the larger the population. Spending on the social security program is not included in the unified budget because it is “off-budget." Market failure cannot occur if non-rival...
Question 7 1 pts Please indicate if the following statement is "true", "false", or "not always true The current GAAP is more based on the transaction approach, which is more focused on the accounts on Income statement. No answer text provided. false true not always true Question 7 1 pts Please indicate if the following statement is "true", "false", or "not always true The current GAAP is more based on the transaction approach, which is more focused on the accounts...
true or false: the market risk premium is always positive.
True or False? Explain your reasoning. (i) All goods and services provided by the government are public goods I know the answer is False but I just don't know how to explain it well enough- please help me explain.
TRUE-FALSE-UNCERTAIN For each of the following claims, indicate whether it is true or false, or whether it could be either one, depending on circumstances. Then, explain why. Your grade will depend on your explanation. Try to make sure your explanation is not only correct but thorough. In particular, if a statement is false for more than one reason, discuss all those reasons (even though, logically, it takes just one contradiction to make the entire statement false). Doing this will prepare...