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Chapter 9: Public Ownership (page 327)

What is 1 disadvantage of public ownership?

Short Answer

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interferences of political and economic situations

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01

Public Ownership 

  • Nationalized assets such as railways will have a limited scope of long-term investment and modernization as governments will in the long run also try to balance their budgets to fulfill the investment duties on other factors such as education, health care, and infrastructure.

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Most popular questions from this chapter

What is 1 advantage of public ownership?

Among the tax proposals regularly considered by Congress is an additional tax on distilled liquors. The tax would not apply to beer. The price elasticity of supply of liquor is 4.0, and the price elasticity of demand is -0.2. The cross-elasticity of demand for beer with respect to the price of liquor is 0.1.

a. If the new tax is imposed, who will bear the greater burden—liquor suppliers or liquor consumers? Why?

b. Assuming that beer supply is infinitely elastic, how will the new tax affect the beer market?

What does the term "nationalization" mean?

Example 9.6 (page 353) describes the effects of the sugar quota. In 2016, imports were limited to 6.1 billion pounds, which pushed the domestic price to 27 cents per pound. Suppose imports were expanded to 10 billion pounds.

a. What would be the new U.S. domestic price?

b. How much would consumers gain and domestic producers lose?

c. What would be the effect on deadweight loss and foreign producers?

The domestic supply and demand curves for hula beans are as follows:

Supply: P = 50 + Q

Demand: P = 200 - 2Q

where P is the price in cents per pound and Q is the quantity in millions of pounds. The U.S. is a small producer in the world hula bean market, where the current price (which will not be affected by anything we do) is 60 cents per pound. Congress is considering a tariff of 40 cents per pound. Find the domestic price of hula beans that will result if the tariff is imposed. Also compute the dollar gain or loss to domestic consumers, domestic producers, and government revenue from the tariff.
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