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b.
Social indifference curves are straight lines with slope of –2. This reflects the fact that society values a “util” to Augustus twice as much as a “util” to Livia.
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5. 6.
It is hard to see any redistributive or efficiency gain to a program of free concerts. If you believe that you can “improve” people’s tastes by exposing them to classical music, then there may be a merit good justification. a. b. c. d. e. f.
It is hard to see a market failure here. The Coast Guard can set a rescue fee equal to the marginal cost of a rescue.
Welfare economics provides little basis for such a subsidy.
Asymmetric information is probably not a problem in a market like this, so it is hard to see why the private insurance market is not allowed to function. It is hard to imagine a basis in welfare economics for this regulation.
This is not an efficient policy. If the problem is that too much water is being consumed, then the answer is to increase the price of water. On that basis, people can decide whether or not they want toilets that require less water. [need answer]
7. 8.
The set of possible allocations is a straight line 100 units long. Every allocation is Pareto efficient, because the only way to make one person better off is to make another person worse off.
It would seem that markets are a good social order by this criterion. Everyone acts selfishly (i.e., maximizes his own utility) but the result is a Pareto efficient allocation of resources. This assumes, of course, that all the conditions for the First Fundamental Theorem are met.
Because the MRS does not equal the MRT, the allocation is not Pareto efficient. To move MRS in the direction of equaling MRT, there should be more crumpets and less tea. a. b. c. d.
False. True. True. False.
9. 10.
Chapter 4 1. a.
b.
c. d. e.
Wilderness area is an impure public good – at some point, consumption becomes nonrival.
Water is rival in consumption and excludable. Hence, it is not a public good. Medical school education is a private good. Television signals are nonrival in competition.
An Internet site is nonrival in consumption (although it is excludable).
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2.
We assume that Cheetah’s utility does not enter the social welfare function; hence her allocation of labor supply across activities does not matter. a. b.
The public good is patrol; the private good is fruit.
Recall that efficiency requires MRSTARZAN + MRSJANE =MRT. MRSTARZAN=MRSJANE =2. But MRT=3. Therefore MRSTARZAN + MRSJANE ?MRT. To achieve an efficient allocation, Cheetah should patrol more.
3.
A pure public good is nonrival in consumption, thus it is necessary to determine whether or not this is the case with the highway. That is, if the additional cost of another person “consuming” the highway is zero, then it is a public good. So, as long as the highway is not congested, then it can be considered to be a public good. However, adding another motorist to an already congested roadway can cause traffic jams that cost motorists more time to travel the highway, which would represent non-zero costs to having an additional person use the highway. Therefore, the congestion of the roadway determines whether or not we could designate it as a public good.
To determine whether or not the privatization of the highway is a sensible idea, it is necessary to consider the advantages and disadvantages of such an action. First, if the market structure is such that privatizing the highway would result in a monopolist in control of the highway, then this would be inefficient. Also, it would be difficult for the government to write a complete contract for maintaining the highway, which would also cause inefficiencies that would result from the privatization of the road. However, if the government owns the highway, it might not have the appropriate incentives to maintain it properly. In such a case, even ownership by a private monopolist might be a sensible solution.
The benefits of maintaining the incomes of the poor accrue to society as a whole, so welfare is a public good. It is hard to say whether or not it should be publicly or privately administered. Private administration might be less costly. On the other hand, private administrators might have an incentive to deprive deserving individuals of benefits in order to cut costs. It would be difficult to write a contract to prevent this kind of behavior, because one cannot specify in advance every conceivable set of circumstances under which welfare should be granted.
A low cost is not enough. We are concerned whether the prisoners are treated decently, whether security is good, and so on.
The experimental results suggest that there is some free riding, but some people do contribute. That’s what happened in Manchester. Also, the experiment suggested that when the game was repeated, people were more likely to free ride. This also happened--the second year, participation was less.
4.
5. 6.
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7. 8.
There is no compelling reason for museums to be run by the government. In the United States, many great museums are run by privately (not for profit), and they seem to do quite well.
In Figure 4.5, draw a line starting at point x that runs to the southeast and is parallel to AB. As long as education is a normal good, more will be consumed. However, if the schooling is financed by a (lump-sum) tax, then the budget constraint shifts in by an amount that depends on the household’s share of the tax burden. Sum of the marginal benefits equals marginal cost at 67 degrees.
9. 10.
Chapter 5 1. Classical economics explicitly requires that all costs and benefits be taken into account
when assessing the desirability of a given set of resources, so Gore’s statement is false. The notion that rescuing the environment should be “the central organizing principle for civilization” provides no practical basis for deciding what to do about automobile emissions (or any other environmental problem), because it provides no framework for evaluating the tradeoffs that inevitably must be made.
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2.
a. b. c. d.
P.
See schedule MSBp.
P*. Grant a unit subsidy of $b per party.
Total subsidy = abcd. “Society” comes out ahead by ghc, assuming the subsidy can be raised without any efficiency costs. (Cassanova’s friends gain gchd; C loses chd but gains abcd, which is a subsidy cost to government.)
If you know who was cooking, the externality is easy to identify, and depending on how many students are involved, the costs of negotiation should be fairly small. It seems feasible to establish property rights to the river and make people pay for the fish.
There are too many farmers and too many city-dwellers for a private negotiation. Too many people are involved for private negotiation.
The price of gasoline does not take into account the increased risks to everyone from more dependence on foreign oil.
Estimate the marginal damage associated with the risk.
The supply of vouchers is vertical at 140 million. The demand curve is downward sloping. For every gallon of gasoline, you either have to buy a voucher or use up one of our own. In either case, this increases the opportunity cost by 75 cents.
3.
a. b. c. d.
4.
a. b. c.
5. 6. 7.
The taxes are too low.
By establishing a market for air pollution rights, the Board of Trade has applied the Coase Theorem. The potential efficiency of the outcome may be laudable, but the distributional impact may be unpalatable to some. a. b.
4. 2.
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《财政学》（第七版）课后题答案
