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Chapter 13: Q.8 (page 316)

Are the following goods non-rival in consumption?

a. slice of pizza

b. laptop computer

c. public radio

d. ice cream cone

Short Answer

Expert verified

a. slice of pizza - Rivalrous.

b. laptop computer - Rivalrous.

c. public radio - Non rival.

d. ice cream cone - Rivalrous.

Step by step solution

01

Content Introduction

Even when one person utilizes a product or service, others can use it as well, making it non-rivalrous.

02

Explanation (part a)

Because two people can't consume the same slice of pizza at the same time, private commodities like pizza slices are competitive.

03

Explanation (part b)

Because multiple people cannot use a laptop computer at the same time, it becomes competitive in terms of consumption.

04

Explanation (part c)

Because anybody can listen to public radio, it can be listened to by a large number of people at the same time. As a result, public radio has no competition in terms of audience.

05

Explanation (part d)

It's difficult for two people to enjoy the same ice cream cone at the same time. Therefore, an ice cream cone is much more competitive in terms of the consumption.

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Most popular questions from this chapter

Radio stations, tornado sirens, light houses, and street lights are all public goods in that all are nonrivalrous and nonexclusionary. Therefore why does the government provide tornado sirens, street lights and light houses but not radio stations (other than PBS stations)?

Do market demand curves reflect positive externalities? Why or why not?

What is the free rider problem?

The Junkbuyers Company travels from home to home, looking for opportunities to buy items that would otherwise end up with the garbage, but which the company can resell or recycle. Which will be larger, the private or the social benefits?

HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow HighFlyer Airlines to give passengers more comfort and sell more tickets at a higher price. However, redesigning the cabin means rethinking many other elements of the airplane as well, like engine and luggage placement, and the most efficient shape of the plane for moving through the air. HighFlyer Airlines has developed a list of possible methods to increase cabin space, along with estimates of how these approaches would affect the plane's operating costs and ticket sales. Based on these estimates, Table 13.5 shows the value of R&D projects that provide at least a certain private rate of return. Column 1 = Private Rate of Return. Column 2 = Value of R&D Projects that Return at Least the Private Rate of Return to HighFlyer Airlines. Use the data to answer the following questions.

Private rate of returnValue of R&D
12%\(100
10%\)200
8%\(300
6%\)400
4%$500

a. If the opportunity cost of financial capital for HighFlyer Airlines is 6%, how much should the firm invest in R&D?

b. Assume that the social rate of return for R&D is an additional 2% on top of the private return; that is, an R&D investment that had a 7% private return to HighFlyer Airlines would have a 9% social return. How much investment is socially optimal at the 6% interest rate?
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