Assign9 - Economics 100 Assignment #9 The Role of...

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Economics 100 Assignment #9 The Role of Government; The Measurement of National Income 1. The cost of a fireworks display is $7,000. There are 10,000 individuals in a town, who each would derive a benefit equal to $1 from watching the fireworks display. (a) Would a private entrepreneur be able to produce the fireworks display? Explain why or why not. (b) Should the government of the town provide the fireworks display, by levying an appropriate tax on each individual? (c) How would your answer to (B) change if each individual in the town would derive a benefit of $0.5 from the fireworks display? 2. Three ship owners would benefit from a lighthouse, which is a public good. Individual A values the lighthouse at $8,500, individual B, at $7,500, and individual C, at $6,500. The lighthouse costs $8,000 to build. (a) Will the lighthouse be built? Why or why not? (b) What is the “free rider” problem? Explain. 3.
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This note was uploaded on 02/29/2012 for the course ECON 101 taught by Professor Unknown during the Fall '10 term at University of Toronto- Toronto.

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Assign9 - Economics 100 Assignment #9 The Role of...

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