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Economics & Public Policies - Essay Example
Author : jhammes
Finance & Accounting
Pages 10 (2510 words)
This research aims to evaluate and present the production possibility curve; basic assumptions underlying the production possibilities curve; Lindahl equilibrium; pollution abatement; break-even analysis; cost-benefit analysis of new road; dependency ratio and effective MTR…
The paper tells that the production possibilities curve represents the total output of the combination of two products in an economy provided the inputs and technology are available. There are 3 basic assumptions underlying the production possibilities curve: quantity and quality of all resources as inputs fixed; unchanged technology and fully employed resources. If the federal state and local governments in the U.S. engage in increased health-related expenditure, they would require increasing taxes to meet the increased costs. Assuming the fixed quantity of resources, i.e. public taxes and technology over a given time period, the U.S. is capable of providing limited amount of public health care services. This also depends upon how much the taxpayers are willing to sacrifice other goods and services for increased public health service. The production possibilities curve shows that increase in health care services will lead to less of other government public services due to its limited resources. Therefore, the production of other goods and services will be less. As the quantity of health care services is reduced, the government will be able to provide more of other goods and services. The probable production possibilities curve is provided in the study. When each member of the community makes a voluntary contribution towards per unit of a pure public good, that contribution equals to his/her marginal benefit derived from the public good at efficient level of output. This equilibrium contribution per unit is known as Lindahl price. ...