The table above shows the marginal benefit from providing police protection in a community of two people, Jake and Elwood. Police protection is a public good
a) What is the marginal social benefit to community from the 4th police car on duty?
b) If the marginal social cost of a police car on duty is $37, what is the efficient number of cars on duty?
c) If the marginal social cost of a police car on duty is $70, what is the efficient number of cars on duty?
a) The community's marginal social benefit is the sum of Jake's marginal benefit and Elwood's marginal benefit. So the marginal social benefit from the 4th police car is $15 + $8 = $23.
b) The number of cars on duty is efficient if the community's marginal social benefit equals the marginal social cost. The marginal social benefit is the sum of Jake's marginal benefit and Elwood's marginal benefit. When three cars are on duty, the marginal social benefit is $25 + $12 = $37, which is the same as the marginal social cost. So the efficient number of cars is 3.
c) As before, the number of cars on duty is efficient if the marginal social benefit equals the marginal social cost. And also as before, the marginal social benefit is the sum of Jake's marginal benefit and Elwood's marginal benefit. But in this case, because for any number of police cars on duty marginal social cost exceeds marginal social benefit, the efficient number
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Refer to Table 6-7
a. Using the information in the table, calculate the income elasticity of demand for good X and characterize the good. Use the midpoint formula. b. Can you calculate the income elasticity of demand for good Y? If you can, show your calculation and characterize the good. If you cannot, explain why.
When RBC economists work out a detailed numerical example of a more general theory, they are performing
A) econometrics. B) number theory. C) calibration. D) topology.
If Canada has an absolute advantage over Denmark in the production of wood, this implies that
a. it requires fewer resources in Canada than in Denmark to produce wood b. the opportunity cost of producing wood in Canada is lower than in Denmark c. Denmark does not benefit by trading with Canada d. Canada should buy wood from Denmark e. Canada does not benefit by trading with Denmark
Minimum efficient scale occurs at the smallest level of output at which a firm can minimize long-run average costs.
Answer the following statement true (T) or false (F)