Economics Chapter 17 Answer National Defense Public Good Both Nonrival

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215. Multiple Choice: Scenario: Alexander and VanessaTwo in...

Question Scenario: Alexander and Vanessa

Two individuals, Alexander and Vanessa, benefit from scientific research.

Alexander‘s marginal private benefit from such research is given by the equation P

= 200 – Q, where Q refers to the amount of research undertaken and P is the price

Alexander is willing to pay for such research. Vanessa’s marginal private benefit

from such research is given by the equation P = 100 – Q. Suppose the marginal

social cost of engaging in such research is constant at $100.

Reference: Ref 17-15

(Scenario: Alexander and Vanessa) Given the information in the scenario

Alexander and Vanessa, what is the socially optimal amount of scientific research

for this economy?

216. Multiple Choice: Scenario: Alexander and VanessaTwo in…

Question Scenario: Alexander and Vanessa

Two individuals, Alexander and Vanessa, benefit from scientific research.

Alexander‘s marginal private benefit from such research is given by the equation P

= 200 – Q, where Q refers to the amount of research undertaken and P is the price

Alexander is willing to pay for such research. Vanessa‘s marginal private benefit

from such research is given by the equation P = 100 – Q. Suppose the marginal

social cost of engaging in such research is constant at $100.

Reference: Ref 17-15

(Scenario: Alexander and Vanessa) Refer to the information in the scenario

Alexander and Vanessa. If the socially optimal level of scientific research is

produced and if both Vanessa and Alexander are truthful in disclosing the marginal

private benefits they expect to receive from this research, what is the price per unit

of research that Vanessa is willing to pay?

Points: 0

217. Multiple Choice: Scenario: Ben and NickTwo individuals...

Question Scenario: Ben and Nick

Two individuals, Ben and Nick, are the only members of a hypothetical community.

They have revealed the marginal private benefits they each receive from a public

good whose marginal social benefit is known. In addition, the marginal social cost

(MSC) of the public good is known and is constant.

Reference: Ref 17-16

(Scenario: Ben and Nick) Refer to the information and figure in the scenario Ben

and Nick. At Q2, the marginal social benefit from the last unit of the public good:

218. Multiple Choice: Scenario: Ben and NickTwo individuals...

Question

Points: 0

Scenario: Ben and Nick

Two individuals, Ben and Nick, are the only members of a hypothetical community.

They have revealed the marginal private benefits they each receive from a public

good whose marginal social benefit is known. In addition, the marginal social cost

(MSC) of the public good is known and is constant.

Reference: Ref 17-16

(Scenario: Ben and Nick) Refer to the information and figure in the scenario Ben

and Nick. Q4:

219. Multiple Choice: Scenario: Ben and NickTwo individuals...

Question

Points: 0

Scenario: Ben and Nick

Two individuals, Ben and Nick, are the only members of a hypothetical community.

They have revealed the marginal private benefits they each receive from a public

good whose marginal social benefit is known. In addition, the marginal social cost

(MSC) of the public good is known and is constant.

Reference: Ref 17-16

(Scenario: Ben and Nick) Refer to the information and figure in the scenario Ben

and Nick. At all levels of public good provision:

220. Multiple Choice: If the marginal social benefit of a p…

Question If the marginal social benefit of a public good is greater than the marginal social

cost of providing the good, then:

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221. Multiple Choice: A common resource is a good that is:

Question A common resource is a good that is:

222. Multiple Choice: An example of a common resource is:

Question An example of a common resource is:

223. Multiple Choice: The private market will lead to _____...

Question The private market will lead to ________of clean air because _________.

224. Multiple Choice: Common resource goods are similar to:

Question Common resource goods are similar to:

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225. Multiple Choice: After many years, a small community d…

Question After many years, a small community decides to build a toll road but then

discovers it is little used. If it wishes the road to be used at the socially optimal

level, the community should:

226. Multiple Choice: Assigning property rights helps to co…

Question Assigning property rights helps to correct the problems associated with common

resources:

227. Multiple Choice: Imposing a Pigouvian tax on a good, c...

Question Imposing a Pigouvian tax on a good, creating a system of tradable licenses, and

assigning property rights are methods to alleviate the problems associated with:

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228. Essay: A movie DVD is a private good, but a ...

Question A movie DVD is a private good, but a pay-per-view movie from your cable company

is considered an artificially scarce good. How are they similar, and what makes

them different?

229. Essay: The fish in the local river are consi...

Question The fish in the local river are considered a common resource, but the city‘s public

sanitation work that keeps the river clean enough for people to fish in is considered

a public good. How are they similar and what makes them different?

230. Essay: The federal government provides natio...

Question The federal government provides national defense to the country. Why would it be

unlikely for national defense to be provided by a private entrepreneur?

231. Essay: Suppose you live in a community that ...

Question Suppose you live in a community that relies on clean drinking water from a nearby

lake. Lately you have noticed that the quality of the water has suffered as pollution

washed into the lake. An editorial in the local newspaper suggests that all

residents donate money to clean up the lake. Why would this suggestion be

unlikely to succeed?

232. Essay: Colleges and universities solicit the…

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Question Colleges and universities solicit their alumni for donations that go toward the

operation and advancement of the college. How does this present a potential free-

rider problem? How can colleges and universities attempt to lessen the free-rider

problem and increase alumni contributions?

233. Essay: Reference: Ref 17-13 (Table: Margina...

Question

Reference: Ref 17-13

(Table: Marginal Benefit of Fire Hydrants) Bob and Nancy live in a new housing

development and they would like to have fire hydrants installed. The table Marginal

Benefit of Fire Hydrants shows Bob‘s and Nancy‘s individual marginal benefits of

different quantities of fire hydrants. Suppose that the marginal cost of installing a

hydrant is $10.

a) What is the most that Nancy would be willing to pay to have one hydrant

installed in the neighborhood?

b) If Nancy had to pay for fire hydrants on her own, how many hydrants would there

be?

c) What is the optimal number of fire hydrants in the neighborhood?

234. Essay: The North Woods is a public area that…

Question

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The North Woods is a public area that supports such a large moose population that

the government sees no reason to regulate or limit the harvest of the moose.

a) From an economic point of view, how is this situation going to lead to market

failure?

b) You are appointed by the governor to regulate the harvest of moose from the

North Woods. How could you use the three tools described in the text to maintain

the efficient level of moose harvest?

235. Essay: Many cities have placed toll booths o...

Question Many cities have placed toll booths on busy highways as a way to reduce

congestion. In order to drive on this toll road, the driver must pay a price at the

booth before proceeding. From an economist‘s point of view, why would a toll road

be part of the solution for the problem of traffic congestion?

236. Essay: More and more consumers are watching …

Question More and more consumers are watching their favorite network television programs

from their computers. Suppose that a network begins to charge a small fee to

access and download an episode of a popular program. For a television network,

the marginal cost of supplying the episode to one more customer is zero.

a) What type of good is this Internet television episode download? Explain.

b) Will the efficient quantity of television downloads be provided? Explain.

Answer

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237. Essay: Reference: Ref 17-14 (Table: Ultimat…

Question

Reference: Ref 17-14

(Table: Ultimate Fighting Marginal Benefit) Ultimate fighting, or mixed martial arts,

is a rapidly growing spectator sport, and most bouts are available on a pay-per-view

basis from local cable companies. The marginal cost of making the bout available

to one additional consumer is zero. The table Ultimate Fighting Marginal Benefit

refers to a viewing of the upcoming championship bout.

a) If all five fans could view the fight without paying, how many would do so, and

what would be the total consumer surplus to those consumers?

b) If the cable company charges $20 to view the championship bout, which

consumers will pay to view it? What is the total consumer surplus for those fans?

What is the total producer surplus for the cable company? How large is the

deadweight loss from this pricing strategy?

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