Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 4RQ
To determine
The production possibility frontier with public and private goods.
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Students have asked these similar questions
Draw a production possibilities curve with public goods on the vertical axis and private goods on the horizontal axis. Assuming the economy is initially operating on the curve, indicate how the production of public goods might be increased. How might the output of public goods be increased if the economy is initially operating at a point inside the curve?
Public products should be on the vertical axis and private goods should be on the horizontal axis of a production potential curve. Explain how the output of public goods might be enhanced, assuming that the economy is initially running along the curve. In the event that the economy is originally running at a point inside the curve, how may the output of public goods be increased?
Using Production Possibilities Curve (PPC), identify the trade-off between public and private goods. What is the opportunity cost if more allocation is needed for the provision of public goods?
Chapter 4 Solutions
Macroeconomics
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Use marginal cost/marginal benefit analysis to...Ch. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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- Suppose there are three consumers of a public good with the following marginal benefits of consumption related to the quantity of the public good provided: Consumer 1: MB1 = 5 – 2Q Consumer 2: MB2 = 4 – Q Consumer 3: MB3 = 3 – Q Calculate and draw the total marginal benefit function of the public good in a fully labelled diagram. If the marginal cost of producing the public good is MC = 2Q, what is the efficient quantity and how much should each consumer contribute to its provision if it were to provided at the efficient level (assuming the non-rival and non-excludable problems could be resolved)?arrow_forwardDefine public and private goodsarrow_forwardPlease explain each solution step by step.Consider an economy with 2 plants, A and B, whose operations produce emissions. The graphs show the marginal benefits (MB) to each plant from its emissions on the y-axis (in Euros) and the quantity of emissions in tons on the x-axis. The graph on the left represents the case when the government imposes a limit on emissions. The graph on the right represents the case when the government imposes a tax on emissions.a) let’s say the government limits the emissions of each plant at 4 tons. The marginal benefit of 4 tons of emissions to plant A is 2 euros. Referring to the graph on left, what is the welfare loss to plant A from the limit imposed by the government? (euros)b) now let’s say the government sets a unit tax on emissions of 6 euros. Under this tax, plant B will produce 6 tons of emissions and plant A will produce 2 tons of emissions. Referring to the graph on the right, what is the total net welfare from the imposition of the tax?…arrow_forward
- Please explain each solution step by step. Consider an economy with 2 plants, A and B, whose operations produce emissions. The graphs show the marginal benefits (MB) to each plant from its emissions on the y-axis (in Euros) and the quantity of emissions in tons on the x-axis. The graph on the left represents the case when the government imposes a limit on emissions. The graph on the right represents the case when the government imposes a tax on emissions. a) let's say the government limits the emissions of each plant at 4 tons. The marginal benefit of 4 tons of emissions to plant A is 2 euros. Referring to the graph on left, what is the welfare loss to plant A from the limit imposed by the government? (euros) b) now let's say the government sets a unit tax on emissions of 6 euros. Under this tax, plant B will produce 6 tons of emissions and plant A will produce 2 tons of emissions. Referring to the graph on the right, what is the total net welfare from the imposition of the tax?…arrow_forwardWhen determining the number of public goods to produce, government must analyze the Marginal Social Benefit (MSB) and Marginal Social Cost (MSC) of each good so they can carefully choose the optimal number of goods to produce in order to Maximize the benefit to society. Answer the questions below about MSB and MSC. Then use the table below the questions to find the number of parks that the government should produce based on the information provided. You will need to complete the table to answer the questions. For questions 4-6 remember to use The Rational Rule to determine the answer to "how many" parks. 2. Define MSB 3. Define MSC 4. How many public parks will be built in this town? 5. If the MSC of each public park decrease to $300, what will be the change in the number of public parks built in this town be? 6. Now assume the social benefit gained with each public park is cut in half. As a social cost of $300 per park, how many public parks will be built in this town? Explain. Total…arrow_forwardWhat challenges do economies face in light of optimal allocation and public goods?arrow_forward
- )In Islandia, all goods and inputs are bought and sold at a central market where there is a single price for each product. Islandia has a large number of citizens who are all utility-maximizers and all goods are produced and sold by profit-maximizing firms, none of which is large enough to influence the prices at the market. Do you know whether the mix of goods being produced and consumed in Islandia is efficient? If so, explain whether or not it is and how the information you know guarantees that the mix is efficient. If not, identify what additional information would you need to know to tell whether the mix is efficient and explain why this information is needed.arrow_forwardPublic 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 answerarrow_forwardPublic goods are often thought to be goods or services that are provided by the government, but that is confusing cause and effect. What are the characteristics of a public good? Hint: Who provides the public good is not one of the characteristics.arrow_forward
- Which of the following is a characteristic of a public good, as defined by economists? Group of answer choices -Any good that the government provides is a public good. -The good is free, such as education. -The good is nonexcludable -The good is depletable (or rivalrous).arrow_forwardThe graph below depicts a schedule of two individual marginal benefit curves (MB1 and MB2) as well as the social marginal benefit (SMB) curve. This good is non-rival in consumption and non- excludable in use, so the SMB was constructed using vertical summation of individual MB curves. Which of the following are TRUE? $20 $15 $13 a b d e Q1 Q2 Q3 SMB MB2 MBI Quantity O b. If the social marginal cost is $20 per unit, then Q2 is the output level that maximizes social net benefit. O e. None of the above are true. O d. Only b and care true OC. The social marginal benefit of the Q1st unit is $28. O a. It must be the case that Q1+02-03,arrow_forwardQUESTION 16 16. Entering patient health care data into a database accessible to health care professionals across the medical profession and a wide region increases the ability to apply artificial intelligence to diagnostics and treatment of diseases. This is an example of a) Negative consumption externality. b) Positive consumption externality. c) Negative production externality. d) Positive production externality. QUESTION 17 17. Which of the following is an example of a negative consumption externality? a) water pollution impact of a paper plant b) honey production and pollination of fruit trees c) second-hand smoke d) vaccination against a communicable disease e) none of the abovearrow_forward
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