--%>
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 : Elucidate The General Agreement of

    Elucidate The General Agreement of Tariffs and Trade (GATT)?

    		•
  • 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 : Forcast 9. The following table shows

    9. The following table shows annual sales data for Stuff Happens, Inc., over the ten-year 1998-2008 period: Year Sales ($ Millions) 1998 $2.0 1999 2.2 2000 2.4 2001 2.6 2002 2.8 2003 3.0 2004 3.2 2005 3.5 2006 3.8 2007 4.1 2008 4.3 A. Calculate the 1998-2008 growth rate in sales using

    		•
  • Q : Explain how an increase in state

    Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges.

    		•
  • Q : Explaination on Economical Management

    ECONOMICS Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the ex

    		•
  • Q : Producers on the best combinations of

    How did producers decide on the best combinations of resources to use?  Who made these resources available, and why?

    		•
  • Q : How government might manipulate its

    Explain how government might manipulate its expenditures and tax revenues to reduce unemployment?

    		•
  • Q : Describe High operating leverage

    Briefly describe High operating leverage?

    		•
  • Q : Self-interest theory demonstration by

    The model of _____ was demonstrated by _____ along with the quote, “The loss of a small finger would remain the average European by sleeping which night, ... but, given he never observed them, he will snore with the most profound security over the loss of millio

    		•
  • Q : Explain the term Earnings per share

    Briefly explain the term Earnings per share (or EPS)?

    		•