Identify the disadvantage of public goods
As public goods are nonrivalrous and nonexcludable, they lead to the free-rider problem where people want to enjoy the benefits without paying the costs. Free-rider incentives make it difficult to accurately elicit peoples' preferences for the public goods and to fund their production.
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See the information in Scenario 4.4. Suppose P = 10, Pc = 100, Pd = 2, A = 5, and I = 50. What is the price elasticity of demand?
A) 0 B) -5/9 C) -1 D) -9/5 E) none of the above
Tax Fighters, Inc., develops, markets, and sells software for tax preparation. Tax Fighters, Inc. sells IRS Tax Fighter, a software for completing federal income tax forms and Gopher Basher, a software for completing Minnesota state income tax forms. For simplicity, assume that all of the costs in this industry are the fixed costs of developing the software packages themselves. The marginal cost of producing another disk is approximately zero.Consider the following information about the demand for tax software. There are an equal number of consumers in each group. Figure 7.1 shows the maximum that each type of consumer is willing to pay for each product. As vice president for pricing, explain your optimal bundling and pricing strategy to maximize Tax Fighter profits from the sale of tax
software. Be sure to clearly explain why your strategy is optimal.
What will be an ideal response?