ECON CH 14

The net social benefit of providing the public good is

$100.

The sequence of market reservation prices, starting with a 2 acre park through an 8 acre park is

$26, $20, $14, $8.

If government needs to raise revenues to pay for a public good, the ideal tax structure would be to tax

all citizens in proportion to their willingness to pay for the public good.

A head tax means the amount of tax paid is

the same for all tax payers.

The Yellowstone National Park is a jointly consumed good in the sense that

the size and beauty of the park is the same for all visitors.

Suppose a wealthy citizen donates 2 acres of land to the city and land costs $20 per acre. The optimal park size is

4 acres.

Suppose the city can purchase land for the park at a cost of $8 per acre. The optimal park size would be __________ acres.

8

Suppose that government accurately knew the three reservation prices and the cost of the public good. To achieve the ideal tax structure and collect no more in tax revenue than $900, each voter should be charged __________ percent of their __________.

90; reservation price

Since the government does not know and cannot discover the voters' reservation prices, it proposes a head tax of $300 per voter. The result of the referendum is

Max votes for the tax but Karen and Tammy vote against it and it fails.

Which of the following items is an example of a nonrival but excludable good?

Pay-per-view movies.

Which of the following is not a proper justification for charging the government with the responsibility for collecting revenues to finance a public good?

The costs of the public good exceed the benefits.

An Internet site that maintains a database of product reviews that anyone can access and has advertisement banners is

a privately provided public good selling its byproduct to advertisers.

To say that a particular good is nonrival means that

consumption of the good by one person does not diminish the availability of the good to others.

HBO shows movies without commercial interruption. This is because HBO

can exclude non paying viewers.

Under an 8% proportional income tax, the relationship between the percentage of income paid in tax and the voters' reservation price is

constant.

A nonexcludable good is one for which

consumers can consume the good without paying for it.

The judicial system is an example of government

defining and enforcing property rights.

Government subsidizes education because

education is thought to have positive externalities.

Pay-per-view television programming is __________ because __________.

inefficient; the marginal cost is zero

If the government proposes a head tax of $300, the relationship between the percentage of income paid in taxes and the voters' reservation prices is

negative.

As individuals,

none of the three will find it worthwhile to purchase the public good.

The public restrooms along with the Interstate are

nonexcludable.

If a good can be consumed by one person and the availability of the good to others is not reduced, this good would be classified as a(n) __________ good.

nonrival

Radio and broadcast television are examples of

pure public goods provided by private firms.

A private good possesses the characteristics of being

rival and excludable.