Chapter 13: Q.12 (page 316)
What can government do to encourage the development of new technology?
The government attempts to internalize some externalities by employing patent and trade secret laws.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Becky and Sarah are sisters who share a room. Their room can easily get messy, and their parents are always telling them to tidy it. Here are the costs and benefits to both Becky and Sarah, of taking the time to clean their room: If both Becky and Sarah clean, they each spends two hours and get a clean room. If Becky decides not to clean and Sarah does all the cleaning, then Sarah spends 10 hours cleaning (Becky spends 0) but Sarah is exhausted. The same would occur for Becky if Sarah decided not to clean—Becky spends 10 hours and becomes exhausted. If both girls decide not to clean, they both have a dirty room.
a. What is the best outcome for Becky and Sarah? What is the worst outcome? (It would help you to construct a prisoner’s dilemma table.)
b. Unfortunately, we know that the optimal outcome will most likely not happen, and that the sisters probably will choose the worst one instead. Explain what it is about Becky’s and Sarah’s reasoning that will lead them both to choose the worst outcome.
Can a company be guaranteed all of the social
benefits of a new invention? Why or why not?
Name two public goods and explain why they are public goods.
Why is a football game on ESPN a quasi-public
good but a game on the NBC, CBS, or ABC is a public good?
What is the free rider problem?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
