--%>

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 : The economies of Japan and US Question:

    Question: What can we learn from the Japanese experience? Is the US headed for a 'lost decade? Answer: There was

  • Q : Why is speculation unlike arbitrage

    Speculation is unlike arbitrage since: (1) speculative buyers always break even. (2) speculation causes increased costs. (3) speculators bear no risk. (4) positive returns for speculators are not sure. (5) competitive speculation equa

  • Q : Construct a 2-D graph which comprises

    How to construct a 2-D graph which comprises drawing a horizontal and a vertical axis?

  • Q : Who define economics as a subset of

    Economists who viewed economics like a subset of jurisprudence combined: (1) John Stuart Mill. (2) Alfred Marshall. (3) Karl Marx. (4) William Stanley Jevons. (5) Adam Smith. Hey friends please give your opinion fo

  • Q : Describe four important areas to

    Describe four important areas to emphasize Expenditures?

  • Q : Drawbacks of capital budgeting Write

    Write down the drawbacks of capital budgeting?

  • Q : Labour economic Can someone help me in

    Can someone help me in finding out the right answer from the given options. The Taft Hartley Act of 1946 made it illegal to encompass a: (1) Right-to-work law passed by the state legislature. (2) Conviction for the misdemeanor and serve as union officer. (3) Union for the agricultural migrants or go

  • Q : Introduction of the term net present

    Give a brief introduction of the term net present value? Write down its admittable rules, their merits and demerits?

  • Q : Illustrate the Goals of Mixed Economy

    Illustrate the Goals of Mixed Economy?

  • Q : Gains from the Exchange Even people who

    Even people who are extremely good at everything couldn’t encompass: (i) absolute benefits in approximately everything. (ii) Much higher incomes than average. (iii) Comparative benefits in everything. (iv) Superior natural endowments of talent.

    Discover Q & A

    Leading Solution Library
    Avail More Than 1430926 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1940327
    Asked

    3,689

    Active Tutors

    1430926

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.