Chapter 5: Q. 5.2 (page 100)
Distinguish between private goods and public goods and explain the nature of the free-rider problem.
Private are owned and public goods are for all.
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How does a city's decision to assess substantial fines on rail operators that persistently generate traffic congestion affect the supply curve for rail services within the city?
A government offers to let a number of students at a public school transfer to a private school under two conditions: It will transmit to the private school the same per-pupil subsidy it provides the public school, and the private school will be required to admit the students at a below-market net tuition rate. Will the economic outcome be the same as the one that would have arisen if the government instead simply provided students with grants to cover the current market tuition rate at the private school? (Hint: Does it matter if schools receive payments directly from the government or from consumers?)
Many people who do not smoke cigars are bothered by the odor of cigar smoke. If private contracting is impossible and in the absence of any government involvement in the market for cigars, will too many or too few cigars be produced and consumed? From society’s point of view, will the market price of cigars be too high or too low?
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?
The French government recently allocated the equivalent of more than $120 million in public funds to Quaero (Latin for “I search”), an Internet search engine analogous to Google or Yahoo. Does an Internet search engine satisfy the key characteristics of public good? Why or why not? Based on your answer, is a publicly funded Internet search engine a public good or a government-sponsored good?
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