Exam 16: Public Choices and Public Goods

The marginal social benefit is the sum of the benefit enjoyed by the consumer of an additional unit of a good or service plus the marginal benefit enjoyed by others.

A private subsidy has what effect on the amount of a good or service produced? Is a private subsidy an appropriate policy to offset the inefficiency from an external cost or an external benefit?

If it is impossible or very costly to prevent someone from benefiting from a good even if the person does not pay for it, the good is

An example of an externality occurs when a chemical factory

Private goods are those for which consumption is

Rational ignorance says that voters will

If production of a good produces an external benefit, in order for the marginal social cost to equal the marginal social benefit,

-The marginal cost of educating a student is $30,000, and this cost is independent of the number of students. The figure above shows the marginal private benefit that a student receives from education. An independent government agency determines that the efficient number of students is 40,000. What subsidy per student must be given to colleges to make the efficient number of students undertake education?

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $54, the efficient quantity of satellites is

A private good is ________ and ________.

Which of the following is TRUE about public goods?

-In the above figure, if a subsidy is granted that generates an efficient allocation of resources, then the output level will be

Rational ignorance about the efficient quantity of a public good can result in

When the consumption of a good creates an external benefit,

-The figure above shows the market for education. Education has an external benefit. a) If the market is competitive and left unregulated, how many students will be enrolled per year? b) What is the efficient number of students? c) In the figure, show the effect of a government private subsidy that moves the market to the efficient number of students. What is the amount of the subsidy and what tuition must the students pay?

Natural monopolies are ________ and ________.

Does the existence of the University of Oklahoma affect citizens who do not attend the University?

-The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, how many students are enrolled in college?

Under what conditions will the political process provide an inefficient amount of a public good?

-In the above table, if the market is perfectly competitive and unregulated, at the equilibrium output level,