ePS3

Question 3 One thing we discussed in class is public good G will be underprovided if privately funded in entirety. This can be attributed at least partially to the condition that public goods must be non-excludable and not prot-generating. The alternative is to start a club - for example a neighborhood HOA may fund a pool and sauna for use exclusively by homeown- ers, or a city may have several different \"members only\" country-clubs that also require a fee. l Q3a. Dene non-excludability and non-rivalous in the context of a public good. Q3b. In practice, non-excludability creates an immediate challenge if the public good is dened by a physical space (ie a park, pool, or gym) as opposed to an 'intangible' idea, like a breakthrough biological nding that could revolutionize vaccines and medicine in the future. If N is the number of people who show up on any given day to use a. physically constrained public good provided at level G, what motivation does a private group have to coordinate and fluid a club? 3c. In the private club setting, if all members 1: divide the monthly cost equally, we can dene the membership fee in terms of average costs: T001.) . (7) Assume the presence of monthly xed costs, and constant marginal cost. AC(n) = 3d. In equation 7 the choice variable is n, meaning current members can freely add new members. What is the fundamental problem of the club in this setting? Describe in 34 sentences. 3e. Let's think of a private K12 academy that is looking to raise more revenues. Two options under consideration by the Chancellor is to either 1) increase enrollment or 2)ra.ise prices, but not both. If we observe the school choosing to raise the tuition price, what must the Chancellor's lead economist behave about the demand curve for seats in the school