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Chapter 5: Q 21 (page 122)

An online video game has the technical capability for a large number of players to participate, as long as the game administrator works to ensure the constant functionality of the game. Adding more players deprives no other participants of the entertainment services provided by the online game. It has been easy, however, to set up a system for excluding participation by anyone who fails to contribute $5 per month to a fund that ensures covering extra expenses generated by that player's participation. Is this game a public good?

Short Answer

Expert verified

The video game is not a public good because it does not consider all the characteristics of a public good.

Step by step solution

01

Step 1. Definition of Public Good.

A good is defined as public good if it is owned by the government and can be used by the public free of cost and without any additional charge.

02

Step 2. Is the video game a public good?

The characteristics of public goods are non-rival and non-excludable. The video game does not satisfy all the characteristics of public goods. The game is non-rival as the addition of more players does not deprive the game for others. The game is excludable as the participant has to pay $5per month for extra expenses generated.

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Most popular questions from this chapter

Draw a diagram of this nation鈥檚 market for automobiles, which are a substitute for buses. Explain how the government policy you discussed in part (b) of Problem 5-5 is likely to affect the market price and equilibrium quantity in the country鈥檚 auto market. How are auto consumers affected by this policy to attain the spillover benefits of bus transit?

Suppose that the current price of a tablet device is \(300 and that people are buying 1 million devices per year. The government decides to begin subsidizing the purchase of new tablet devices. The government believes that the appropriate price is \)260 per tablet, so the program offers to send people cash for the difference between \(260 and whatever the people pay for each tablet they buy.

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(d) Under the assumption that the program causes people to buy 1.5 million tablets and also causes the market price of tablets to rise to \)320, how much will this program cost the taxpayers?

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(b) What is the dollar amount of the increase in total expenditures on blood pressure monitors in this state following the expansion of the State Care program?

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Scans of internal organs using magnetic resonance imaging (MRI) devices are often covered by subsidized health insurance programs such as Medicare. Consider the following table illustrating hypothetical quantities of individual MRI testing procedures demanded and supplied at various prices, and then answer the questions that follow.

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\(100100,00040,000
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90,00060,000
\(50080,00080,000
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(b) Suppose that the government establishes a health plan guaranteeing that all qualified participants can purchase MRI tests at an effective price (that is, out-of-pocket cost) to the individual of \)100 per test. How many MRI tests will people consume?

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