--%>
Assignment Help - homework help

How might government correct this divergence

What divergences arise between equilibrium and an efficient output spillover benefits are present?  How might government correct this divergence?

E

Expert

Verified

When spillover benefits are present, the equilibrium output will be smaller than the efficient output because the consumer is willing to pay a price equal to the consumer’s individual marginal benefit, but no more.  Since social benefits exist in addition to the private benefit, the government must either aid the producer to encourage more output or engage in its own production of the item with the spillover benefits.

   Related Questions in Business Economics

  • Q : Prices are the automatic regulator

    “Prices are the automatic regulator that tends to keep production and consumption in line with each other.”  Explain.

    		•
  • Q : When productive resources are utilized

    While productive resources are utilized efficiently: (w) prices greatly exceed production costs for current outputs. (x) opportunity costs are at their minimums for all goods. (y) domestic production exceeds the value of foreign output. (z) the value

    		•
  • Q : Technology in production Drawing a

    Drawing a production possibilities frontier needs the supposition that: (1) Decision makers encompass discretion over resource accessibility. (2) Technology is constant. (3) Income is fairly distributed. (4) Resources are considerably diverse. (5) At least three goods

    		•
  • Q : Exploit consumers in highly competitive

    This is difficult for firms within highly competitive markets to exploit consumers since: (i) consumer advocates organize boycotts that generate bad publicity. (ii) market pressures force fair distributions of products. (iii) the government sets price

    		•
  • Q : Competition and the Invisible Hand

    Elucidate: Competition and the “Invisible Hand”?

    		•
  • Q : Guardian implies that there really is

    Evaluate and explain the statements: “Market is its own guardian implies that there really is an invisible hand or taskmaster that watches over the decision makers in the marketplace”

    		•
  • Q : Illustrate the Optimal or best

    Illustrate the Optimal or best product-mix and also Law of increasing opportunity costs?

    		•
  • Q : Categorization of economists for buying

    Assume that you bought a ton of gold in Santiago, and Chile for $450 per ounce and immediately sold all of this in Antwerp, Belgium for $480 per ounce. Therefore economists would categorize your movement as: (i) arbitrage. (ii) scalping. (iii) screening. (iv) speculat

    		•
  • Q : Discuss the economic aspects of ticket

    Discuss the economic aspects of ticket scalping also identifying the gainers and losers?

    		•
  • Q : Factor Price Equalization theorem

    Please answer each of the exercises below. While you may work together on the homework, you must turn in your own work (in your own words). Homework must be handed in at the beginning of class on the due date unless other arrangements have been made. No late homework will be accepted. Homework wi

    		•