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Comparing Inefficient Outcomes for a Public Good
A radio program can be broadcast to additional listeners at zero marginal cost. Analysis shows that exactly 10,000 people have a positive willingness to pay for the program. Consider two potential outcomes:
- Outcome A: The program is broadcast to only 8,000 listeners.
- Outcome B: The program is broadcast to 12,000 listeners, which includes the 10,000 who value it positively and 2,000 who value it negatively.
Both outcomes are Pareto-inefficient. Compare and contrast the nature of the inefficiency in Outcome A and Outcome B. In your evaluation, explain for each case who is being harmed or made worse off (relative to an efficient outcome) and how a Pareto improvement could be made.
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Social Science
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CORE Econ
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Evaluation in Bloom's Taxonomy
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