Ch 13 Check your understanding

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What makes public goods so different from private goods?

public good are free with the expense of tax. private goods are good consumed and purchases by private consumer. not available to public.

How might the government use market forces to encourage recycling?

put up a recycling tax or fines that

Why wouldn't rural highway in Montana, Freeway 405 in Los Angeles, and the New Jersey Turnpike (toll) all be classified as public good? Which would be most like a public good and which would be least?

Because they are all open to the public, they can not be excludable and the MC of someone else using it is zero. the most like a public good is Montana, Los Angeles, and New Jer

when trying to estimate the estimate the external benefits of a college education, what kinds of specific benefits would you include?

Job options, lifetime earnings, cultural literacy, gracious living.

Assume that you are convinced that if something isn't done now, global warming is going to create extensive problems and damages at the end of this century. If you were preparing a cost-benefit analysis of the impacts and had a 100-year horizon for your projections, would you use 3% or an 8% discount rate?

i will use 3% discount rate, because Selecting an appropriate discount rate is important because different rates can produce very different cost-benefit results and therefore affect policy recommendations. A high discount rate has the power to reduce sizable future benefits and costs to very small present values. A lower rate reduces future values less, making the value of future benefits and costs closer to current dollar values.


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