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Chapter 13: Q. 20 (page 316)

Why is a football game on ESPN a quasi-public

good but a game on the NBC, CBS, or ABC is a public good?

Short Answer

Expert verified

Football games on the NBC, CBS, or ABC channels are public goods, because those channels are loose to broadcast if one owns a television. ESPN isn't a unfastened channel, people tons purchase this channel via a tv company. but, as soon as this channel is bought, the television provider can't manage what number of humans are looking on that unmarried customers account, thus it's far a quasi-public exact.

Step by step solution

01

Concept Introduction

A publicpreciseis a goodthat'sbothnonexcludable and nonrivalous,consequentlyapersonalcompanycan notanticipatetoacquireany of the socialbenefit.
A quasi-public proper have factors of both non-public and public items; they're partly excludable and partially rivalrous.

02

Explanation

ESPN is a non-public company generating tv which seems to be public right. almost anybody has get right of entry to to it, however you need to pay to look at it on ESPN. So it is in which that privatised characteristic of ESPN is available in, as you have to pay for it. So proper here, let's preserve in thoughts with ESPN. We pay for that if we want to watch some thing on that. So it's nearly like a provider now NBC, CBS and ABC. these are just available to every person. So they may be loose so long as we have a television and cable connection. So the difference right here is in reality and just pronouncing that ESPN is best a apparently public top inside the feel that it's public. however if you pay for it, so it's that privatize its that mix of our private and public attributes.

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Most popular questions from this chapter

Assume that the marginal private costs of a firm producing fuel-efficient cars is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel-efficient cars is the same as the marginal social benefits. Discuss one way that the government can try to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is trying to affect production through costs, not benefits.

Why might private markets tend to provide too few incentives for the development of new technology?

Education provides both private benefits to those who receive it and broader social benefits for the economy as a whole. Think about the types of policies a government can follow to address the issue of positive spillovers in technology and then suggest a parallel set of policies that governments could follow for addressing positive externalities in education.

The Gizmo Company is planning to develop new household gadgets. Table 13.4 shows the company鈥檚 demand for financial capital for research and development of these gadgets, based on expected rates of return from sales. Now, say that every investment would have an additional 5% social benefit鈥攖hat is, an investment that pays at least a 6% return to the Gizmo Company will pay at least an 11% return for society as a whole; an investment that pays at least 7% for the Gizmo Company will pay at least 12% for society as a whole, and so on. Answer the questions that follow based on this information.

Estimated rate of returnPrivate profits of the firm from an R&D project (in \( millions)
10%\)100
9%\(102
8%\)108
7%\(118
6%\)133
5%\(153
4%\)183
3%$223

a. If the going interest rate is 9%, how much will Gizmo invest in R&D if it receives only the private benefits of this investment?

b. Assume that the interest rate is still 9%. How much will the firm invest if it also receives the social benefits of its investment? (Add an additional 5% return on all levels of investment.)

Will the demand for borrowing and investing in R&D be higher or lower if there are no external benefits?
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