Answers to chapter 15

Answers to chapter 15 - Solutions to End-of-Chapter...

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Solutions to End-of-Chapter Exercises Chapter 15 [30] Section 15.1 [30.1]: External Benefits and Public Goods 1.1 $40,000, $30 1.2 someone other than the purchaser of the good 1.3 non-rival, non-excludable 1.4 benefits from a good or service without paying for it 1.5 a. The WiFi system is socially efficient. b. Total contributions probably would not cover the cost of the system, because of the incentive to free-ride. c. Passwords, by making the service “excludable” and controlling free- riding, would elicit total contributions sufficient to cover the cost. 1.6 a. The provision of additional wolf litters is socially efficient. b. Distribute part of citizen contributions to ranchers to compensate them for livestock losses. 1.7 a. A question from a student is socially efficient when at least five students are confused. b. A confused student will not ask a question because the private cost of 10 utils exceeds the private benefit of 2 utils. This is true for both socially efficient and socially inefficient questions. c. Give students credit for asking questions.
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This note was uploaded on 10/25/2009 for the course ECON 81509 taught by Professor during the Spring '09 term at Mesa CC.

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Answers to chapter 15 - Solutions to End-of-Chapter...

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