1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Lana71 [14]
3 years ago
13

Suppose that preferences over private consumption C and public goods G are such that these two goods are perfect substitutes, th

at is, the marginal rate of substitution of public goods for private goods is a constant b > 0. Determine the optimal quantity of public goods that the government should provide, and interpret your results. Make sure you show all of the relevant cases. What happens when b changes, or when q changes?
Repeat part (a), except with perfect complements preferences, that is, for the case where the representative consumer always wishes to consume private consumption goods and public goods in fixed proportions, or C = aG, with a > 0.
Business
1 answer:
Temka [501]3 years ago
7 0

Answer:

Please see explanation below.

Explanation:

Public goods are goods consumed collectively, they are provided for all members of a community,

no one can be excluded from their consumption. The consumption by one person does not decrease the consumption possibilities for others. Public goods are available for everybody without paying, and these goods cannot be rationed: they are either provided for the whole community, or for no one. Examples of public goods include the public lighting system, public roads, radio broadcasts, national defence, lighthouses, town pavements, etc.

Private goods, on the other hand, are goods consumed individually, and if a unit has been consumed by

someone, then no one else can also consume the same unit. Private goods are scarcely available, and consuming a unit will decrease the amount available for further consumption. Therefore consumers compete for private goods, i.e. private goods are rival in consumption. Consumers can consume them if they pay the price, non-payers are excluded from consumption.

In the first scenario, given that both the private good and public good are perfect substitutes, the optimum quantity produced by the government is at the point where marginal social cost is equal to the marginal social benefit. This optimum output is lower than that of the private firm because the price of public good is higher than price of private good (since marginal social cost > marginal private cost).

If b increases, that means consumers are willing to give up more units of public goods for one unit of the private good. Therefore, the quantity produced by the government will reduce.

For the second part of the question: C = aG, where a > 0.

This implies that equal or more units of the private good is consumed with a particular units of public good. The optimum output still remain at the point where marginal social cost is equal to marginal social benefit but this output level is lower than if the two goods were to be perfect substitutes.

You might be interested in
Liu Electronics budgeted sales of $400,000.00 for the month of November and cost of goods sold equal to 65 percent of sales. Beg
Leno4ka [110]

Answer:

Purchases= $252,000

Explanation:

Giving the following information:

Sales= $400,000

Cost of goods sold equal to 65 percent of sales.

Beginning inventory= $80,000

Ending inventory= $72,000

To calculate the purchase required, we need to use the following formula:

Purchases= sales + desired ending inventory - beginning inventory

Purchases= (400,000*0.65) + 72,000 - 80,000

Purchases= $252,000

8 0
3 years ago
Accounts receivable in an existing business:
Artemon [7]

Answer:

The correct answer is letter "A": are rarely worth their face value.

Explanation:

Accounts receivables are notes issued to customers after selling them a product or rendering services on credit. The repayment term may vary from 30, 60 or 90 days. If an account receivable is not paid after that period it could be considered as an uncollectible account which implies the company will incur losses.

<em>Accounts receivable are hardly ever accepted at face value (real value of the moment of the purchase) because companies add the interest rate that is to be charged for the sale on the account.</em>

4 0
3 years ago
Let’s assume that the old clunker you have been driving needs $500 in repairs in order to pass an annual car inspection. You are
Anna11 [10]

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

3 0
3 years ago
Scenario:Annabeth is a mechanical engineer who specializes in making machine parts. She wants to buy a factory and begin making
Fudgin [204]

What is the best business organization for Annabeth’s new company?

A corporation, because she will need financing to get started. I would personally say that Annabeth should start a coporation because she will need financing to have the funds to start and mass produce the parts and solar panels. She also plans to expand so in the future to move her items overseas, a corporation is the safest bet on that happening.

5 0
3 years ago
Read 2 more answers
Mr. Wilcox has been enrolled in Lexington PFFS Medicare Advantage Health Plan (Lexington) for several years. Recently, Mr. Wilco
GuDViN [60]

Answer:

a. Lexington can allow for Mr. Wilcox’s continued enrolment for up to 12 months whether or not he is in a visitor/traveller (V/T) program.

Explanation:

Private - Fee - For - Similar Plans is much similar like the original medicare plans. This is provided through a private health insurance company.

In the given instance, Mr. Wilcox plans to relocate near his children, who live in some other state.

As he will move to another service area, he shall simply not be disabled to claim the benefits of PFFS. Further, the insurance company can still cover him for another 12 months, even if he does not choose to visit the current service area as traveller in upcoming 12 months.

7 0
3 years ago
Other questions:
  • A tornado struck the only manufacturing plant of Toledo Farm Implements (TFI) on June 1. All work-in-process inventory was destr
    13·1 answer
  • Cazden Motors' stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price
    5·1 answer
  • A mutual fund that invests in stocks that provide a predictable source of dividend income and the potential for dollar appreciat
    7·1 answer
  • if a bookseller buys a paperback book for 4$ and the book is labeled with a selling price of 6.99,how much is the dollar markup?
    6·1 answer
  • The development cost of a project X is $150,000. The operating costs for year 1, 2 and 3 respectively are $5000, $6000, and $ 70
    15·1 answer
  • Suppose the most you would be willing to pay to have a freshly washed car before going out on a date is $8.00. The smallest amou
    6·1 answer
  • _____ demands create expectations that may be hard to reconcile or satisfy.
    5·1 answer
  • The unrecognized net gain or loss balance must be amortized when it exceeds 10% of the larger of the: beginning accumulated bene
    5·1 answer
  • Which of the following is true of a central bank that employs inflation targeting? A target rate of annual inflation is maintain
    8·1 answer
  • What will be the statement of financial position of this?
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!