ECONOM 1014 Lecture Notes - Lecture 22: Movie Theater, Private Good, Wi-Fi

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fuchsiaeagle209

11 Sep 2017

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Non-rival: one person"s use of the good does not reduce the ability of another person to use the same good. Cable tv (everyone can watch the same channel) Rival: can"t use the good at the same time. Excludable: people who don"t pay for the good can easily be prevented from obtaining it. Food in the supermarket (must pay for the item first) Some interstates can have tolls for road usage. Excludable -- strong incentive to pay for and produce them. Only people excluded from consuming a private good in a competitive market are those who aren"t willing to pay. Goods aren"t always produced efficiently because of free riders. Usually produced by the government, but this factor does not make it a public good. Education and health care are public services, but aren"t public goods. No one owns the resource, so all of the users have an incentive to overuse it. Sometimes property rights and quotas need to be placed.

Related Questions

Question 3

We saw in class that the same good can fall in different categories (public/private/club/common resource) depending on circumstances. An example of such a good would be watching a movie at the theater. If a lot of people want to watch it, the movie is a _________. If very few people want to watch it (to the point where a room could not even be filled), the movie is likely to be a _______.

A. a common resource; a public good

B. a public good; a common resource

C. a private good; a club good

D. a club good; a private good

3 points

Question 4

Which of the following statements about the free-rider problem is not true?

A. Individuals have an incentive to free-ride when the good is not excludable.

B. The kinds of goods for which the free rider problem arises are common resources and public good.

C. Markets for goods for which there is a free-rider problem are inefficient because not enough of the good is produced.

D. Goods for which the free-rider problem exists tend to be over provided relative to what would be optimal.

4 points

Question 5

To achieve the efficient provision of public goods, the

A. market should be allowed to operate without government intervention.

B. government must limit the provision of those goods.

C. government must tax producers of those goods.

D. government must either provide those goods or subsidize their production.

3 points

Question 6

Which of the following statements about public goods is not true?

A. Because people cannot be excluded from their consumption and thus have no incentive to pay for them, public goods are underprovided by the market.

B. Efficiency requires that the government provide or fund (subsidize) the provision of all public goods.

C. Efficiency requires that the government provide or fund only the public goods that create more benefits than costs to society.

D. In reality, it is hard to provide public goods efficiently.

3 points

Question 7

Public goods must be provided by the government as the market on its own will fail to provide them. However, even with government provision it is very hard to achieve efficiency. Why?

A. In reality, it is very hard (if not impossible) to accurately estimate the benefits of providing a public good.

B. A. In reality, there can be overruns in the cost of providing the public good.

C. Government decisions about which public goods to provide can be influenced by lobbying by interest groups.

D. All of the above are true.

4 points

Question 8

Which of the following is not a common resource?

A. congested roads

B. clean water

C. wild life, which hunters want to hunt and others want to view.

D. a fireworks display.

3 points

Question 9

Many species of animals must be protected by law to keep them from extinction. Why are cows not one of these endangered species even though there is such a high demand for beef?

A. Cows reproduce at a high rate and have adapted well to their environment.

B. Public policies protect cows from predators and diseases.

C. Cows are privately owned (private goods), whereas many endangered species are owned by no one (common resources).

D.There is a natural ecological balance between the birth rate of cows and human consumption.

3 points

Question 10

Which of the following statements about common resources is not true?

A. Due to the free-rider problem, common resources tend to be overused.

B. Because there is rivalry in the consumption of common resources, whenever one person uses a common resource it is imposing a negative externality on others who might also want to use it.

C. There are no private solutions to the management of common resources.

D. One of the solutions that ensures that common resources are properly managed is their privatization.

3 points

Question 11

In our analysis of the firmâs behavior and goals, when we talk about cost, we include _________, and when we talk about profit, we mean ________.

A. Explicit costs only; economic profit

B. Implicit costs only; economic profit

C. Implicit costs only; accounting profit

D. Explicit + implicit costs; economic profit

E. Explicit + implicit costs; accounting profit

3 points

Question 12

One of the differences between explicit and implicit costs is that

A. explicit costs must be greater than implicit costs.

B. explicit costs do not require a direct monetary outlay, whereas implicit costs do.

C. implicit costs do not require a direct monetary outlay, whereas explicit costs do.

D. implicit costs must be greater than explicit costs.

3 points

Question 13

Which of the following is FALSE:

A. If accounting profit is zero, then economic profit is negative

B. Economic profit takes cost the opportunity cost of time and capital into account

C. Economic Profit = Accounting Profit + Implicit Cost

D. Economic Profit = Accounting Profit â Implicit Cost

3 points

Question 14

Which of the following is an example of an implicit cost?

(i) the owner of a firm forgoing an opportunity to earn a large salary working in Wall Street

(ii) interest paid on the firm's debt

(iii) rent paid by the firm to lease office space

A. (ii) and (iii) only

B. (i) and (iii) only

C. (i) only

D. (iii) only

3 points

sapphirekangaroo316

On Monday, May 26, Tina Brown walked into Innovative Patios to begin her new job as Payroll Manager. She was met by Julie Thornbury, President and major shareholder of the company. Julie got to the point: Good, you're here. I need a payroll plan by Friday. This place is a mess.

Yesterday I got a call from Human Resources & Skills Development Canada. He said we aren't filing ROEs. Do you know what they are?

We've got employees telling us that they get more tax deducted than their friends who earn the same amount. Jim, our production manager is barking that he should have a tax credit for his kid. We've been fined for sending in employee taxes late. I don't get it. I pay two people to run the administrative side of things and they mess things up.

I hear there are changes in the pipeline. I heard about the federal budget, but I don't know if we will benefit or not. Will it be just more paperwork? The bottom line is that I don't want any more government types coming around here threatening me. Tell me what we have to do.

Company History

Innovative Patio is a private corporation that installs patios stones made from recycled material. The company was started twenty years ago by Julie's parents Elena and Seamus. Elena and Seamus were immigrants to Canada and earned a living through a small landscaping business. They hired workers on contract and paid in cash for many years until they were audited by the tax department.

To avoid further problems, they incorporated the company five years ago, but their workers on the payroll, and hired Mary as a bookkeeper to fill out all the government forms.

Payroll Department

Mary quickly became Innovative Patios office manager, human resources manager, financial administrator, and payroll manager. The workload was overwhelming and she convinced Julie to hire Liza to help her. Liza suggested they use Quicken to keep track of all accounts including payroll.

Mary and Liza fill out all cheques by hand for the ten employees and fill out all the government forms by hand. The company's remittances are based on a checklist Mary developed in 2009 (See Exhibit), Mary is unhappy because she works very hard, but everyone complains about things being wrong. When Julie landed a large contract that would require 15 more people to be hired, Mary recommended that Julie hire a professional payroll manager. I can handle the other stuff, but the Canada Revenue Agency and the employee complaints are driving me crazy. I just can't keep up. I will be as helpful as I can.

Julie led Tina to her office and rushed off to take care of a crisis on the loading dock. Before Tina could get settled, Mary walked in, I am so happy to meet you. Just tell me what you need and Liza and I will get it for you. The employees are paid bi-weekly and this Wednesday is a payday. I haven't prepared anything

because I knew you would be here.

Exhibit: Mary's 2009 Remittance list

Item	Amount	How much to remit	When
Payroll	Annual $500,000	$1,000 payroll remittance	Monthly Pay balance plus interest when assessment arrives
CPP	4.95% earnings (to annual max)	$2,062.50	Monthly
EI	1.98% earnings (to annual Max)	$49,000	Year-end
GST	Net annual subject to HST $200,000 at 13%	$1,500	Monthly Use the refund to go toward payroll remittances due

Please answer the following questions:

a) Who are the key stakeholders in this case?
b) What are the resources needed?
c) What resources are available?
d) What is the main issue in this case?

Thank you in advance!

apricotsalmon963

Yesterday I got a call from Human Resources & Skills Development Canada . He said we aren't filing ROEs. Do you know what they are?

Company History

Innovative Patios is a private corporation that installs patios stones made from recycled material. The company was started twenty years ago by Julie's parents Elena and Seamus. Elena and Seamus were immigrants to Canada and earned a living through a small landscaping business. They hired workers on contract and paid in cash for many years until they were audited by the tax department.

To avoid further problems, they incorporated the company five years ago, but their workers on the payroll, and hired Mary as a bookkeeper to fill out all the government forms.

Payroll Department

Mary quickly became Innovative Patios office manager, human resources manager, financial administrator and payroll manager. The workload was overwhelming and she convinced Julie to hire Liza to help her. Liza suggested they use Quicken to keep track of all accounts including payroll.

Mary and Liza fill out all cheques by hand for the ten employees and fill out all the government forms by hand. The company's remittances are based on a checklist Mary developed in 2009 (See Exhibit), Mary is unhappy because she works very hard, but everyone complains about things being wrong. When Julie landed a large contract that would require 15 more people be hired, Mary recommended that Julie hire a professional payroll manager. I can handle the other stuff, but the Canada Revenue Agency and the employee complaints are driving me crazy. I just can't keep up. I will be as helpful as I can.

because I knew you would be here.

Exhibit: Mary's 2009 Remittance list

Item	Amount	How much to remit	When
Payroll	Annual $500,000	$1,000 payroll remittance	Monthly Pay balance plus interest when assessment arrives
CPP	4.95% earnings (to annual max)	$2,062.50	Monthly
EI	1.98% earnings (to annual Max)	$49,000	Year-end
GST	Net annual subject to HST $200,000 at 13%	$1,500	Monthly Use the refund to go toward payroll remittances due

Please answer the following questions:

a) Who are the key stakeholders in this case?
b) What are the resources needed?
c) What resources are available?
d) What is the main issue in this case?

Thank you in advance!

raspberrybee29

ECONOM 1014 Lecture Notes - Lecture 22: Movie Theater, Private Good, Wi-Fi

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