Evaluating a Change in Service Provision
Based on the scenario below, evaluate the economic outcome of the decision to switch from a free, publicly funded model to a priced, privately provided model. In your evaluation, you must calculate the change in total social benefit and justify your conclusion.
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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
Evaluation in Bloom's Taxonomy
Cognitive Psychology
Psychology
Related
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