The optimal provision of a public good occurs when the sum of the marginal rate of substitution for all members of society equals 1, the marginal rate of transformation
What is the relationship between the marginal rates of substitution in the competitive market? Use this relationship to explain why too few public goods are provided in the competitive market.
The competitive market allocation occurs where the MRS for all members of society are equal to 1. This implies that the MRS for each individual is too large relative to the optimum. In order to reduce the MRS such that the sums add up to one, we need to increase the consumption of the public good and decrease the consumption of the private good. This will reduce the MRS for each individual.
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If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $26 trillion?
A) about 15 years B) about 17 years C) about 25 years D) about 30 years
The government banking regulation that places an upper limit on the money supply is
a. deposit insurance by the FDIC. b. reserve requirements on bank deposits. c. periodic bank examinations and audits. d. limitations on the types of assets that a bank may own.
If income were equally distributed, a nation's Lorenz curve would be identical to the _______________.
Fill in the blank(s) with the appropriate word(s).
What creates an incentive for firms in a collusive agreement to cheat and increase output?
What will be an ideal response?