Chapter 13: Q.15 (page 316)
What is the free rider problem?
Free riders are those who want other people to fund a public good and then intend to use it themselves.
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Suppose that Sony's R&D investment in digital devices has increased profits by 20%. Is this a private or social benefit?
When residents in a neighborhood tidy it and keep it neat, there are a number of positive spillovers: higher property values, less crime, happier residents. What types of government policies can encourage neighborhoods to clean up?
Which of the following goods or services are nonexcludable?
a. police protection
b. streaming music from satellite transmission programs
c. roads
d. primary education
e. cell phone service
Assume that the marginal private costs of a firm producing fuel-efficient cars is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel-efficient cars is the same as the marginal social benefits. Discuss one way that the government can try to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is trying to affect production through costs, not benefits.
Is it inevitable that government must become
involved in supporting investments in new technology?
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