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Chapter 5: Q. c (page 108)
Would a government find it easier or harder to raise funds for a public good that all people value similarly but that current government officials possess varying capabilities to provide?
Hard.
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How does the jump in measles cases since 2000 illustrate the positive externality associated with measles vaccinations? Explain briefly.
A nation鈥檚 government has determined that mass transit, such as bus lines, helps alleviate traffic congestion, thereby benefiting both individual auto commuters and companies that desire to move products and factors of production speedily along streets and highways. Nevertheless, even though several private bus lines are in service, the country鈥檚 commuters are failing to take the social benefits of the use of mass transit into account.
(a) Discuss, in the context of demand-supply analysis, the essential implications of commuters鈥� failure to take into account the social benefits associated with bus ridership.
(b) Explain a government policy that might be effective in achieving the socially efficient use of bus services.
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?
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?
Why do representatives of taxpayers who fund the NSLP program experience more difficulties in designing effective incentive structures for officials who manage that program than does a company's shareholders who seek to change the incentives confronting firms' managers?
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