The optimal size of government is theoretically determined by following the principal that additional public sector activity is desirable only if the benefits of that activity exceed its opportunity cost. Valuation Problems Because of an absence of a price signal for government goods, it is sometimes very difficult to put a monetary value on the benefits of government goods. Who is paying for them and who is benefitting from them
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- What is a market-failure rationale for the government investing in transportation and infrastructure, for example roads, highways, bridges and tunnels? a. Government policy acts to correct for the under-provision of private goods by the private, unregulated market. b. Government policy acts to correct for the over-provision of private goods by the private, unregulated market. c. Government policy acts to correct for the over-provision of public goods by the private, unregulated market. d. Government policy acts to correct for the under-provision of public goods by the private, unregulated market.To determine the optimal amount of a public good to supply, the government must know Question 9Answer a. the price elasticity of demand of each buyer. b. the supply curve of the government. c. everyone's valuation for the public good. d. the revenue of selling the good.Give typing answer with explanation and conclusion Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Implement tradable pollution permits Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to consumers equal to the vertical distance between the marginal private benefit curve and the marginal social benefit curve Offer a subsidy to producers equal to the vertical distance between the marginal private benefit curve and marginal social benefit curve Introduce emission taxes
- Distinguish between Public Goods and Private Goods. Give examples.tudy Tools s ss Tips s Tips Point A TAX REVENUE (Billions of dollars) C D 20 Complete the following table by indicating what the government should do in order to maximize tax revenues if it is operating at each of the points listed. + OOO с $ INCOME TAX RATE (Percent) xo Raise Tax Rates Lower Tax Rates Keep Current Tax Rates O O O ooo 100 % MacBook Pro G Search or type URL & * O ( O C 11 A-ZWhich one of the following is a definition of a merit good? A) Services which can only be provided by the government through taxesB) Goods which provide cear social and private benefits to consumersC) A good which can be produced by the market but would likely be under-consumedD) Goods which are beneficial in consumption but consumers are unaware of the extent of the benefitsE) Goods which are not capable of being provided by the market because they are excludable and rival Merit goods are an example of which of the following problems in economics:A) Free riderB) Principal-agentC) Tragedy of the CommonsD) Intertemporal choiceE) Excludable, non-rival goods provision De-merit goods have characteristics that if left the market mechanism, they are over consumed and impose private costs on the individual consume them, and also have wider social costs. Which of the following ways in which a government might seek to reduce consumption of of merit costs? Check all the apply A) Impose…
- Outline the budgetary process and explain the role that politics plays.Discuss how governments decide the optimal level public good provision and then consider the impact of taxation due to such provision. Use examples to substantiate your points.Assuming the government pays higher cost of production by paying wages that are higher than the private sector rates, analyse the effect of the change in the costs of producing public good caused by government inefficiency?
- Po =-16-12- E 描く AL वा PA=80-0.6qA PB=50-0.5qB MC $40 AaBbCcDdfe Normal AaBbCcDdEe No Spacing The community has two individuals: Mr. A and Ms. B and the good is a public good, say a highway. Mr. A has a stronger demand (PA) for the highway than Ms. B (PB). The following are their individual inverse demands and MC: Aa BbCcDc AaBb CcDdE A Heading 1 Heading 2 a. Derive the inverse market demand (PM) by adding up vertically the two individual inverse demands PA and PB. Label the cutoff point for the market demand. PM PA+PB = Set gaga because of open access and indivisibility (i..e., no rival in consumption) which are the characteristics of public goods. MacBook Air b. Graph the two individual demands and the market demand. Drawn on the board in the classroom and determine the kink point for the market demand. The vertical and horizontal intercepts of Mr. A's demand curve are The vertical and horizontal intercepts for Ms. B's demand curve are The vertical intercepts for the market demand PM…Governments use cost-benefit analysis by to evaluate its public programs and justify its public expenditures. What information and procedures are required by the government to implement cost benefit analysis?Suppose that before tax was imposed 400 million gallons of gasoline was supplied at $3.00 per gallon.a. What happens when government imposes a tax of 60 cents per gallon on sellers? b. How would such a tax affect the market for gasoline i.e. what is the new equilibrium? c. On whom does the incidence of the tax fall more heavily? d. How much government revenue will be generated by the excise tax? e. What happens when government imposes a tax of 60 cents per gallon on buyers? f. How would such a tax affect the market for gasoline i.e. what is the new equilibrium?