Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?
What will be an ideal response?
When the market fails to provide certain goods and services, there is a clear case for government intervention. If left to the free market mechanism, no public goods would be provided and, as a result, there would be a clear market failure. Public goods can be used by one person without reducing availability of the good for consumption by others (non-rival) at no additional cost and once the good is produced, it is usually impossible, or at the very least difficult, to exclude anyone from consuming it (non-excludable). Due to these results, consumers can take advantage of public goods without contributing sufficiently to their creation. This is called the free rider problem.
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Since the end of World War II,
A) tariffs around the world fell substantially. B) agricultural subsidies were significantly reduced. C) most nations began to apply tariffs uniformly across all industries. D) tariffs increased in low-income countries and fell a small percentage in high-income countries.
The above figure shows the market for rice in Japan. SDomestic represents the domestic supply curve, and Sworld represents the world supply curve. If imported rice is banned, the loss in social welfare is
A) a + b + c + d + i + j. B) a. C) c + e. D) a + b + c + d.
The Equal Pay Act of 1963 says which of the following?
a. people working the same job at the same company must be paid the same amount b. people working the same job in the same industry must be paid the same amount c. people working in a company with the same education level must be paid the same amount d. people working in an industry with the same education level must be paid the same amount
What word do we use to refer to the amount of goods and services produced for each hour of a worker's time?