Public goods is an example of a so called "market imperfection". Define and describe what characterizes a public good. Give an example of what a public good can be. Discuss and describe what problems could occur in the case of public goods. Describe in what way problems about public goods can partly be connected to morality and - because of this – create problems for society. Finally – in short – discuss how an unregulated situation with public goods can run the risk of being "myopic" (that is "near sighted" or thinking "short term") in its use of the resource. Motivate your answer |

Public goods is an example of a so called "market imperfection". Define and describe what characterizes a public good. Give an example of what a public good can be. Discuss and describe what problems could occur in the case of public goods. Describe in what way problems about public goods can partly be connected to morality and - because of this – create problems for society. Finally – in short – discuss how an unregulated situation with public goods can run the risk of being "myopic" (that is "near sighted" or thinking "short term") in its use of the resource. Motivate your answer |

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 2PA

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Why is it difficult for private markets to providethe optimal quantity of a public good? Why is itdifficult for government to provide the optimalquantity of a public good?
Two towns, each with three members, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. ln each town, somepeople enjoy firewurks more than others.a. ln the town of Baypor~ each of the residents val•ues the public good as follows,F,ank $50Joe $100Call ie $300Would fireworks pass a cost-benefit analysis?Explain.b. The mayor or Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. W'ho would vole in favor, and whowould vote against? Would the vote yield thesame answer as the cost-benefit anal)•Sis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost-benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, lo split the cost equally amongall residents. Who would vote in favor, and whowould vote against? Would…
Both public good;; and common resources involve b. How can the government solve the problemexternalities. caused by people like Fredo?a. Arc t~ extemalities associated with public goodsgenerally positive or negative? Usc examples in your answer. Is the froe. market quantity of public goods generally greater or Less than the efficientquantity?b. Are the externalities a.;;sociated with commonresources generall)' positive or negative? Uscexamples in your answer. Is the free·market usc ofcommon resources generally g:reatc.r or less thanthe efficient use?
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1. Governments and pharmaceutical companies rushed quickly ahead to develop a vaccine. Vaccinations and immunizations are examples of positive externalities. A positive externality is when an activity creates a benefit for those who are not involved in the transaction, a third party. Let’s examine the vaccination of Covid-19 as a positive externality. Question: Why is the Covid-19 vaccination considered a positive externality? 2. Considering the information provided and your responses to Question 3 explain the potential unintended consequences of each one of these polices. Which policy would you enact and why?
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Both public goods and common resources involveexternalities.a. Are the externalities associated with public goodsgenerally positive or negative? Is the free-marketquantity of public goods generally greater or lessthan the socially efficient quantity? Cite examplesin your answer.b. Are the externalities associated with commonresources generally positive or negative? Is thefree-market use of common resources generallygreater or less than the socially efficient use?Cite examples in your answer.
1. How did Covid-19 affect businesses and the overall economy? 2. Governments and pharmaceutical companies rushed quickly ahead to develop a vaccine. Vaccinations and immunizations are examples of positive externalities. A positive externality is when an activity creates a benefit for those who are not involved in the transaction, a third party. Let’s examine the vaccination of Covid-19 as a positive externality. Question: Why is the Covid-19 vaccination considered a positive externality? 3. Market supply curve S and private demand curve Dp represent the market for vaccinations. Equilibrium is at point e, and the number of people getting the vaccination is Qe. Society would benefit, however, if more people would get the vaccination. Demand curve DS represents the marginal social benefit (MSB), which includes the private demand for vaccinations plus the external benefits that flow from it. Socially optimal enrollment would be Q1 (point f). Society would benefit the most by…
Two towns, each with three residents, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. In each town, somepeople enjoy fireworks more than others.a. In the town of Bayport, each of the residentsvalues the public good as follows:Frank $50Joe $100Callie $300Would fireworks pass a cost–benefit analysis?Explain.b. The mayor of Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. Who would vote in favor, and whowould vote against? Would the vote yield thesame answer as the cost–benefit analysis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost–benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, to split the cost equallyamong all residents. Who would vote in favor,and who would vote against? Would…
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