Consider a public good that has 2 consumers, Dylan and Fred. Dylan’s demand for the public good is higher than Fred’s demand for the good. Show graphically and explain why the private market will provide an inefficient level of that public good.
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Consider a public good that has 2 consumers, Dylan and Fred. Dylan’s demand for the public good is higher than Fred’s demand for the good. Show graphically and explain why the private market will provide an inefficient level of that public good. Please Help!!!!!!!!
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- 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 answerA small town provides a fireworks display, which is a public good, every fourth of July. For simplicity, assume the town only has two residents: Hayden and Madison. Their demands for the fireworks display are illustrated in the figure to the right. Construct the market demand curve for this public good. 8.00 7.50- 7.00- 6.50- 6.00- 5.50- 5.00- 4.50- Use the line drawing tool to draw the market demand curve (DMarket) for the fireworks display. Properly label this line. 4.00- DMadison DHayden 3.50- Carefully follow the instructions above, and only draw the required objects. 3.00- 2.50- P 2.00- 1.50- 1.00- 0.50- 0.00- 2 4 6 8 10 12 14 16 Quantity (number of fireworks) Price (dollars per firework)Suppose there are two residents in a neighborhood, and you know both of their demand curves for a public good. What would you have to do in order to figure out what the social demand curve? A.Multiply the two demand curves together B.Add their demand curves together C.Subtract the demand of the person with the lower valuation of the public good from the demand of the person with the higher valuation of the public good D.Subtract the demand of the person with the higher valuation of the public good from the demand of the person with the lower valuation of the public good
- Suppose there are two residents in a neighborhood, and you know both of their demand curves for a public good. What would you have to do in order to figure out what the social demand curve? a-Subtract the demand of the person with the higher valuation of the public good from the demand of the person with the lower valuation of the public good b-Add their demand curves together c-Multiply the two demand curves together d-Subtract the demand of the person with the lower valuation of the public good from the demand of the person with the higher valuation of the public goodPlease answer the following questions.1. Explain the factors affecting Demand.2. Explain the difference between positive and negative externalities alongwith an example.3. How are public goods different from private goods?4. Explain the Law of Supply.5. With regard to demand and Supply, explain the point of MarketEquilibrium.(a) Alpha, Beta and Gamma are consumers of a public good. The marginal benefit ($) of each unit of the public good is given by the following table. Public Good Alpha Beta Gamma 1st unit 8 10 12 2nd unit 4 8 3 3rd unit 2 5 0 4th unit 1 5 0 Suppose each unit of the public good costs $15. How many units of the public good would be optimal? Explain. (b) If the public good becomes a private good and the price drops to $8. The marginal benefits are the same as that given in (a). How many units of the private good would be purchased? Explain.
- Answer this question based on the following information for a public good. Pa and Pb represent the prices that citizens (a) and (b), the only two people in this nation, are willing to pay for additional units of a quantity (Qc) of the public good. Qs represents the quantity of the public good supplied by government at each of the collective prices. Qc Pa Pb Qs 1 $4 $5 5 2 3 4 4 3 2 4 3 4 2 3 2 5 1 2 1 If only 1 unit of this public good is produced, then the marginal benefit is Multiple Choice $3, and the marginal cost is $9. $9, and the marginal cost is $3. $6, and the marginal cost is $3. $4, and the marginal cost is $7.See each of the following characteristics or scenarios about externalities. Choose a correct answer whether each statement matches with the term negative externality or the term positive externality. a. Resources are overallocated. ( Positive, Negative) externality く-ー b. Gini installs a very nice front garden, raising the property values of all the other houses on her block. -- ( Positive, Negative) externality c. Market demand curves are too far to the left (too low).<-- ( Positive, Negative) externality d. Resources are underallocated. <-- ( Positive, Negative) ternality Blank # 1 Blank # 2 Blank # 3 Blank # 4Suppose there are only two consumers in the market for a public good. The figure to the right shows marginal benefit lines for a public good for the two individuals, Andrew (A) and Brenda (B). Use the line drawing tool to draw and label the social marginal benefit line. Make sure that the line extends from quantity level 0 to 10 as the private marginal benefit lines do. Carefully follow the instructions above, and only draw the required object. Marginal Benefit, Marginal Cost ($) 20- 18- 16- MC 8 9 Quantity of a Public Good MBA MBB 10 11 12
- Suppose there are only two consumers in the market for a public good. The figure to the right shows marginal benefit lines for a public good for the two individuals, Andrew (A) and Brenda (B). Use the line drawing tool to draw and label the social marginal benefit line. Make sure that the line extends from quantity level 0 to 10 as the private marginal benefit lines do. Carefully follow the instructions above, and only draw the required object. Marginal Benefit, Marginal Cost ($) 20- 18- 16- 14- có + 2- 0- -O 0 1 MC 2 3 4 5 6 7 8 9 Quantity of a Public Good MBA MBB 10 11 12 QUse the graph attached below as a starting point (either download it or print it out). Add curves, labels, etc. to this graph in order to show the following: 1. Show that this good has a $4/unit negative externality (external cost), such as pollution. 2. Shade the area that represents the Deadweight Loss (lost gains from trade) caused by the external cost. 3. Show a tax or subsidy wedge (whichever you think is appropriate) that will solve the problem of the external cost. 4. Show the socially optimal level of production that the Pigouvian tax or subsidy above will help the market to achieve. You may use software or pencil and paper to complete this graph. Upload it here when you are done.19. This next question will require you to draw on what you have learned about supply and demand and taxes. A study finds that leaf blowers make too much noise; therefore it is considered a externality, so the government imposes a $10 tax on the sale of every unit to correct for the social cost of the noise pollution. The tax completely internalizes the externality. Before the corrective tax, Leaves are Us Manufacturing regularly sold blowers for $100 and market quantity is 300. Draw the supply and demand curve for leaf blowers. Label the axes, the curves, market price, market quantity, and equilibrium. Which curve represents private or internal costs? represents external and private costs? This is also known as What is the private market price? What is the private market quantity? Which curve costs. After the tax is in place, the consumer price of leaf blowers rises to $105. With this change in price, the number of leaf blowers will (decrease/increase). Why will this happen?