The goal of this question is to have you use a model to determine the socially optimal provision of a public good. The setting is very similar to the one described in Practice Questions 2 · Public Goods. So I recommend you first attempt the analytical question there and look at the solutions before you attempt this question. The main difference is that now there are many individuals, although they have identical preferences. Now a small country inhabited by 100 people has to decide whether or not to create a national broadcaster and how to finance it. The alternative could be a perfectly competitive private market. Let capital X be the number of media services (TV channels and radio stations) offered by the broadcaster(s), and small x be the number of media services consumed by a single individual. All individuals in the country have the same marginal benefit from media services, equal to 10-x. The marginal cost of providing an additional media service is constant and equal to 200 per media service. This can be interpreted as the marginal cost for the national broadcaster, or the market supply in the case of a private market. Assume that advertising on national broadcasters is not allowed by constitution. Answer the following: (Note: this question is automatically graded. The system checks whether your answer matches the entered by the instructor. When asked to pick between Y/N, enter only one letter in capital format: Y or N, don't enter Yes or No. When asked to enter a value only enter the number, for instance 5. Don't enter 5 units, or 5 cereal bars, 5$, etc.) 1. Is Free-to-Air signal a public good? (Y/N) 2. If we were to consider the Free-to-Air signal by a national broadcaster as public good, what would be the socially optimal number of services? X-public- 3. How many media services would each individual consume in this case? x- 4. Suppose the government could only finance the public good through a fee. What should be the government fee (per unit of media service) that each individual has to pay in order to provide the socially efficient amount of public good? unit fee-

The goal of this question is to have you use a model to determine the socially optimal provision of a public good. The setting is very similar to the one described in Practice Questions 2 · Public Goods. So I recommend you first attempt the analytical question there and look at the solutions before you attempt this question. The main difference is that now there are many individuals, although they have identical preferences. Now a small country inhabited by 100 people has to decide whether or not to create a national broadcaster and how to finance it. The alternative could be a perfectly competitive private market. Let capital X be the number of media services (TV channels and radio stations) offered by the broadcaster(s), and small x be the number of media services consumed by a single individual. All individuals in the country have the same marginal benefit from media services, equal to 10-x. The marginal cost of providing an additional media service is constant and equal to 200 per media service. This can be interpreted as the marginal cost for the national broadcaster, or the market supply in the case of a private market. Assume that advertising on national broadcasters is not allowed by constitution. Answer the following: (Note: this question is automatically graded. The system checks whether your answer matches the entered by the instructor. When asked to pick between Y/N, enter only one letter in capital format: Y or N, don't enter Yes or No. When asked to enter a value only enter the number, for instance 5. Don't enter 5 units, or 5 cereal bars, 5$, etc.) 1. Is Free-to-Air signal a public good? (Y/N) 2. If we were to consider the Free-to-Air signal by a national broadcaster as public good, what would be the socially optimal number of services? X-public- 3. How many media services would each individual consume in this case? x- 4. Suppose the government could only finance the public good through a fee. What should be the government fee (per unit of media service) that each individual has to pay in order to provide the socially efficient amount of public good? unit fee-

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter1: What Economics Is About

Section: Chapter Questions

Problem 19QP

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