Composition of Social Benefit with Private Provision of Min's Music
When 'Min's Music' is provided privately at a price greater than zero, the total social benefit is no longer just the sum of all listeners' benefits. Instead, it is calculated as the sum of the broadcaster's revenue and the consumer surplus of those who still choose to listen at the set price.
0
1
Tags
Social Science
Empirical Science
Science
Economy
CORE Econ
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
Related
A company creates a radio program that can be made excludable, meaning they can charge listeners for access. The cost to broadcast the program to one additional listener is zero. The company finds that the socially optimal number of listeners (where total welfare is maximized) is 10,000. However, to generate revenue, they set a price that results in only 6,000 listeners. Which of the following statements best analyzes the difference between these two outcomes?
Pricing Strategy for a Digital Product
Analyzing Inefficiency in Excludable Goods
A company offers a streaming music program that is excludable, but the marginal cost of adding a new listener is zero. The market demand for the program is represented by the equation P = 15 - 0.0015Q, where P is the price in dollars and Q is the number of listeners. To generate revenue, the company sets a price of $6 per listener. What is the value of the total economic surplus that is lost because the price is set at $6 instead of the socially efficient price?
Consider a market for a digital good that is excludable (access can be restricted) but has a marginal cost of zero for each additional user. The market is represented by a standard downward-sloping demand curve on a price-quantity graph. The company sets a price, P₁, which is above zero. At this price, the quantity demanded is Q₁. The point on the demand curve corresponding to this price and quantity is Point B. The demand curve intersects the price axis at Point A and the quantity axis at Point C. Match each economic concept with the geometric area that represents it in this scenario.
A company provides an excludable digital music service where the cost of adding one more listener is zero. The company sets a price of $6, which results in fewer listeners than the socially optimal level. The deadweight loss in this situation is created because the consumers who pay the $6 price are paying more than the marginal cost of the service.
Evaluating Pricing Strategies for Digital Goods
A company provides an excludable digital music service where the cost of adding one more listener is zero. The market demand is linear. At the socially efficient quantity of 10,000 listeners, the price would be $0. The company decides to charge a price of $6, which reduces the number of listeners to 6,000. The value of the total economic surplus lost due to this pricing decision is $______. (Enter a number only, without commas or symbols).
A company provides an excludable digital service for which the cost of adding one more user is zero. To generate revenue, the company sets a price above zero. Arrange the following statements to describe the logical sequence of economic effects that results from this pricing decision.
Evaluating a Subsidy to Correct Market Inefficiency
Composition of Social Benefit with Private Provision of Min's Music
Learn After
Evaluating a Nation's Environmental Progress
A city government organizes a public laser light show. While anyone can see it, they decide to sell tickets for a special viewing area with synchronized music. The demand for tickets is represented by the following schedule:
- Price $12: 0 tickets sold
- Price $10: 100 tickets sold
- Price $8: 200 tickets sold
- Price $6: 300 tickets sold
- Price $4: 400 tickets sold
- Price $2: 500 tickets sold
- Price $0: 600 tickets sold
If the city sets the ticket price at $6, what is the total social benefit generated from the ticketed viewing area?
Calculating Social Benefit for a Subscription Service
Evaluating a Change in Service Provision
When a private company sells a digital news subscription, the total social benefit created from this service is correctly measured by the total revenue the company collects from its subscribers.
A community develops an online platform offering high-quality local history video lectures. Access is granted via a monthly subscription. The demand for subscriptions is shown in the table below:
Price per Month Number of Subscribers $20 0 $16 100 $12 200 $8 300 $4 400 $0 500 If the community sets the subscription price at $8 per month, what is the total social benefit generated per month from this service? Assume the demand curve is linear between the points given.
Evaluating Social Benefit of a Subscription Service
A private company offers an online, ad-free video streaming service for a monthly fee. The graph below illustrates the market demand for this service. The company sets a price at P*, which results in Q* subscribers. This pricing strategy creates three distinct areas under the demand curve:
- Area A: The triangle above the price P* and below the demand curve, from a quantity of 0 to Q*.
- Area B: The rectangle with height P* and width Q*.
- Area C: The triangle under the demand curve between quantity Q* and the maximum quantity demanded at a price of zero.
Match each economic concept with the area (or combination of areas) that correctly represents it in this market.
Impact of Pricing on Social Benefit
Pricing Strategy Analysis for a Community Streaming Service
Evaluating a Change in Service Provision