Students Again

Describe:
a) two public goods

Public Transportation
Military

b) two positive externalities

Education
Immunization

c) two negative externalities

Pollution from vehicles
Destroying environment by building more roads.

Describe:
Why government must become involved in each of the previous examples situations (6 total)?

1. Public Transportation: Government involvement is essential because public transportation cost is very large and the scale of providing this good is very large. They need to assist the local government with funds to build roads and provide the buses needed for citizens to get around town.
2. Military: Government is responsible to protect their citizens. They have to provide funds, training and infrastructure of the military. The scale of protecting citizens is also large and requires the help of the US government to facilitate this benefit.
3. Education: Government provides funds for public education (elementary and secondary). They also set requirements and standards that the schools and students should meet. They help provide money through financial aid to make getting an education easier. The education helps citizens to compete with the world.
4. Immunization: The government is concerned with the health of their citizens. They provide requirements of immunization shots to protect from viruses and diseases. They require all school children to have certain shots before starting school. The scale needed to immunize the people is also large and requires government help to facilitate it.
5. Pollution from vehicles: The government sets certain levels of pollution allowed from vehicles. They are somewhat concerned with the environment and the impact of man made products. In order to have manufactures and producers of good produce goods that will not hurt the environment, the government have to set rules for them to follow.
6. Destroying environment by building more roads: The government needs to be involved in the infrastructure of roads because they have to setup rules and regulation of where they can be built. Some land has to be preserved. They also have to help the local government with funding projects to add more roads and infrastructure.

What happens to the equilibrium price and quantities for the 4 externalities (from parts b and c in the first example question) when the  externalities start to exist? (how does equilibrium price and quantity change - in what directions)

1. Education: increase equilibrium price; equilibrium quantities indeterminate. Quantities depend of relative changes in supply and demand.
2. Immunization: increase equilibrium price; equilibrium quantities indeterminate. Quantities depend of relative changes in supply and demand.
3. Pollution from vehicles: decrease equilibrium price; equilibrium quantities increase
4. Destroying environment by building more roads: decrease equilibrium price; equilibrium quantities increase

Explain why you would characterize the two public goods (from part a in the first example) as being both non-rival and non-excludable?

Public transportation and the military would be characterized as a public good because they fit in the definition of public goods. Everyone can benefit from these goods. All citizens can ride the buses, subways, or other types of transportation that is available in the area. The military will benefit all citizens in the country and abroad. They protect and serve everyone; no one is excluded from protection of the military. Unlike private goods where if one person benefits no one else does; where as public goods if one benefits all can still benefit.