Exam 16: Public Choices and Public Goods

Long Beach Island, off the coast of New Jersey, is considering building a sand barrier to protect the houses on the island from future hurricanes. For residents of Long Beach Island, this barrier system would be a

Why is society's marginal social benefit curve for a public good found by vertically summing individual marginal benefit curves and not by horizontal summation as is the case for private goods?

-In the above figure, in order to promote an efficient allocation of resources, the government could grant a subsidy equal to

A free rider problem is created by

If a public good was left to be provided by the private sector,

-The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the efficient number of students at the college?

An example of an activity that generates an external cost is

Suppose a good has an external benefit and no external cost. When a competitive, unregulated market is at its equilibrium, then the

-Broomfield city council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year. The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. If voters in Broomfield are rationally ignorant and the police department achieves the highest attainable budget, the political equilibrium is ________ police officers.

The economy's marginal benefit curve for a public good is found by ________ for all individuals.

Long Beach Island, off the coast of New Jersey, is considering enhancing its system of satellite towers to help communication during emergencies such as hurricanes. A study showed that in Superstorm Sandy the existing number of satellite towers resulted in the marginal social cost of a satellite tower being less than the marginal social benefit. To achieve efficiency, this study indicates that the

An example of a public good is

To two hunters, a deer running in a forest is

-The above figure shows the marginal private benefit and marginal social cost of a college education. A $10,000 subsidy to colleges results in a college charging tuition of

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of college education in Inland. If Inland's government wants to provide the efficient level of education, it must set tuition at ________ per year to ensure that ________ million students are enrolled.

Consider a market in which there is an external benefit. The inefficient market equilibrium is such that

Every year as the clock nears midnight on December 31st, the eyes of the world turn to Times Square in New York City to watch the famous ball drop at midnight. The event is open to everyone, but it is advised you arrive early to be able to participate because the square quickly becomes crowded with no space left for latecomers. This celebration is most like a

A good or service or a resource is rival if

A free-rider problem exists if

A public good is ________ and ________.