--%>
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 : What are economic resources What are

    What are economic resources? What are the major functions of the entrepreneur?

    		•
  • Q : Capitalism-Tightly regulate business I

    I have a problem in economics on Capitalism-Tightly regulate business. Please help me in the following question. The govt. in a purely capitalist state would not: (1) Find out the property rights. (2) Enforce contracts among private parties. (3) Offer

    		•
  • Q : Explain how women expanded production

    Explain how women expanded production possibilities?

    		•
  • Q : Illustrate the advantage and

    Illustrate the advantage and disadvantage of Partnership?

    		•
  • Q : Are quantities supplied-demanded equal

    In perfectly competitive market, the market demand curve is given by Qd = 10 − Pd, and the market supply curve is given by Qs = 1.5Ps. a) Prove that the market equilibrium price and

    		•
  • Q : Interrelationships between economic

    Explain in detail the interrelationships between economic facts, theory, and policy.  Critically evaluate this statement:  “The trouble with economic theory is that it is not practical.  It is detached from the real world.”

    		•
  • Q : Distinction between Component cost and

    Describe briefly Distinction between the term Component cost and Composite cost?

    		•
  • Q : What is the opportunity cost of your

    Suppose you arrive at a store expecting to pay $100 for an item, but learn that a store two miles away is charging $50 for it.  Would you drive there and buy it?  How does your decision benefit you?  What is the opportunity cost of your decision?  Now suppose you arrive at a s

    		•
  • Q : Explain determining the types of the

    Explain determining the types of the various products that will be produced?

    		•
  • Q : How market system promotes

    How market system promotes technological improvements?

    		•