Econ11Fall2007NotesForLecture_26Dec10

Econ11Fall2007NotesForLecture_26Dec10 - Lecture XXVI Dec...

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Lecture XXVI Dec 10, 2007, Problem Set #7 Due I. Preparation for the Final II. Government and the Provision of Public Goods III. Externalities: A Special Type of Non-Rivalry IV. Market Solutions to Externality Problems V. Trade and Globalization I. Preparation for the Final A. 2006 final is on Blackboard – don’t study from this! B. See answer to problem #1 of problem set #6 on Blackboard for an outline of the course C. Q & A Session in Funger 103 Wed, 12/12, 1-2:30pm D. TAs and Yezer will hold regular office hours E. Story of “Larry” F. Gorbychov joke (1989?): Mitterrand has 100 mistresses, one has AIDS but he doesn't know which one; Bush has 100 bodygards, one is a terrorist, but he doesn't know which one; I have 100 economists, one is smart, but I don't know which one. II. Government and the Provision of Public Goods A. Public goods have non-exclusion, non-rivalry 1. Non-exclusion - producer can't collect fees 2. Non-rivalry - my use doesn't lower your use so marginal cost of my use = 0, but can't set price = 0 B. Optimal provision of non-rivalry goods: add individual demand curves vertically. Set marginal cost equal to marginal benefit measured as vertical sum of individual
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Econ11Fall2007NotesForLecture_26Dec10 - Lecture XXVI Dec...

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