--%>
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 : Explain the following from Hull Explain

    Explain the following from Hull, England a news dispatch: “The fish market here slumped today to what local commentators called a ‘disastrous level’—all because of a shortage of potatoes”.

    		•
  • Q : Define internal rate of return What do

    What do you understand by the term internal rate of return?

    		•
  • Q : Define the for whom query in market

    The market system responses the “for whom?” query with: (i) distributing goods on the basis of require. (ii) using central planning to coordinate production decisions. (iii) catering to consumers with adequate resources to demand goods. (i

    		•
  • Q : Define condition when one gain unless

    When no one can gain unless someone else loses, in that case current arrangements are: (w) economically efficient. (x) not optimal. (y) inequitable. (z) the best cure for scarcity. Can someone explain/help me with best solution abo

    		•
  • Q : Understates the economic cost of a

    Computing the cost of college education like the cost of books, tuition and materials, room as well as board, and spending money: (i) overstates the economic cost of a college education. (ii) accurately measures the economic cost of a college educatio

    		•
  • Q : International Trade & Globalization

    Question: 1.   Long-term Growth, International Trade & Globalization a.   In terms of understanding the importance of trade to an economy, the most impor

    		•
  • Q : Explanation of theory of pricing for

    The theory of pricing for particular goods explained in Adam Smith’s Wealth of Nations is most consistent along with: (1) mercantilist doctrine. (2) Richard Cantillon’s distinction between “value in

    		•
  • Q : Define Dependent and independent

    Define Dependent and independent variables?

    		•
  • Q : Independent queue vs. pooled queue

    Instruction: McDonald's vs. Burger King - these two fast food chains use different waiting line design: Independent queue vs. pooled queue. To compare the two different queue systems on equal footing, let's assume that we pick a McDonald's sto

    		•
  • Q : Introduction of the term Financial

    Give a brief introduction of the term Financial Leverage?

    		•