Relate these questions and your responses to types of “market failure.” Could local fire departments be...

Relate these questions and your responses to types of “market failure.”

Could local fire departments be privately owned and operated? Describe the likely result if tax money were no longer used to support fire departments?

Solutions

Expert Solution

Market fails when it does not result in socially efficient outcome. Fire protection is necessarily a public good in the sense that exclusion of one individual house is impossible if protection is provied to several houses. Privately owned good has consumers that have ownership rights so that neighbours cannot share what individual houses are buying. In case of fire protection, if your house is burnt, fire fighters cannot leave neighbour's house in flames as the protection is somehow mutually inclusive. If privately owned, it would not be operated for the above mentioned reasons. Private provision will result in two high a price for fire protection and too few houses proteced against.

If tax money were no longer used to support fire departments, then privately everybody will try to free ride and no fire services will be provided. People have no incentive to pay for a service that cannot excludes others so even if there is a mutual agreement to pay into a fund, to finance fire protection, there will be too limited funds.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Relate these questions and your responses to types of “market failure.” 1. What role do you...

Relate these questions and your responses to types of “market failure.” 1. What role do you think government should play in our economic system to maximize the wellbeing of our citizens? Provide specific examples of when you think government involvement is warranted to improve the answers to the 3 main economic questions.

Outline and explain in detail four types of market failure. What types of problems do market...

Outline and explain in detail four types of market failure. What types of problems do market failures give rise to in the economy? Please give an example for each of the market failures you have outlined. Diagrams are not required in this question. (30 marks, approximately 300 words please).

A debate rises from time to time about whether local fire departments should be privately operated,...

A debate rises from time to time about whether local fire departments should be privately operated, with services sold directly to customers. What problems would be involved in such a system? (Hint: externalities).

(a) 30 marks Outline and explain in detail four types of market failure. What types of...

(a) 30 marks Outline and explain in detail four types of market failure. What types of problems do market failures give rise to in the economy? Please give an example for each of the market failures you have outlined. Diagrams are not required in this question. (approx 300 words) (b) 10 marks Does market failure automatically mean that the government should intervene to deal with the problem? Explain your answer. This question refers to market failure as a whole and...

(a) Outline and explain in detail four types of market failure. What types of problems do...

(a) Outline and explain in detail four types of market failure. What types of problems do market failures give rise to in the economy? Please give an example for each of the market failures you have outlined. Diagrams are not required in this question. 30 marks (b) Does market failure automatically mean that the government should intervene to deal with the problem? Explain your answer. This question refers to market failure as a whole and not to a particular type...

An Economic questions relating to market and non-market failure 2 sub questions. Please answer both thank...

An Economic questions relating to market and non-market failure 2 sub questions. Please answer both thank you 1.a)What is a `nonmarket failure?' Charles Wolf Jr describes 9 mechanisms by which government intervention may be increased in the absence of efficiency-related reasons for doing so {5 factors governing nonmarket demand and 4 factors governing nonmarket supply). Which of these mechanisms seem compelling to you? Which seem unconvincing? What do the 9 mechanisms have to do with nonmarket failures? b) Identify two...

Explain how the presence of asymmetric information could result in a market failure in a private...

Explain how the presence of asymmetric information could result in a market failure in a private health insurance market. Feel free to use a supply and demand diagram to illustrate the effect of asymmetric information.

It could be argued that college degrees correct a possible market failure for employers looking for...

It could be argued that college degrees correct a possible market failure for employers looking for good employees. (a) What is the perceived market failure? (b) Would free college and student loan forgiveness, policies advocated by some democratic presidential candidates, correct the market failure? Explain.

Buying a House (research your local real estate market and specify the different types of house...

Buying a House (research your local real estate market and specify the different types of house ownership options available. Are there any government programs available for first time home buyers? What are the requirements to take advantage of these government programs? What are the steps necessary to take to help you make a decision about buying a house? How much down payment do you need to make? What is a mortgage and what are the different types available? When do...

1. how does the concept of consumer surplus and producer surplus relate to market failure from...

1. how does the concept of consumer surplus and producer surplus relate to market failure from an economic perspectice? How do demand-side failures and supply-side failures result in equilibrium points that are not optimal for society? 2. During week 2, the quantity demanded of hot dog buns at a price of $1.20 increased from 100 units in week 1 to 120 units during the week 2 when hot dogs sold at $1.89 rather than $2.29. The next time hot dogs...

Subjects