Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

 
A. User Charges 
Advantage: Those who benefit bear the cost 
Disadvantages: Result in under consumption 
Administering pricing system adds transaction costs 
 
B. Uniform Provision: 
supplying the same quantity of the good to everyone 
Advantage-Saves on transaction cost Disadvantages- Leads some 
to under consume, other to over consume High demanders may 
supplement public consumption, increasing total transaction costs 
C. Queuing: 
 instead of charging individual money for access to the 
publicly provided goods or services, the government requires that 
they pay a cost in waiting time 
Advantage: Goods (like health 
care) allocated not necessarily on basis of who is wealthiest. 
Disadvantages: Alternative Basis of allocation (who has time 
to spare) may be undesirable. Time is wasted 
14.3.7 Efficiency Condition for Public Goods 

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Pure public goods are efficiently supplied when the sum of 
the marginal rates of substitution (over all individuals) is equal to 
the marginal rate of transformation
Marginal rate of substitution (MRS) 
It tells how much of the private good each individual is willing 
to give up in order getting one more unit of the public good.
 
 
 
Sum of the marginal rate of substitution: 
It tells us how much of the private good all the members of 
society, together, are willing to give up in order getting one more 
unit of the public good. 
 
Marginal rate of transformation (MRT): 
 
It tells us how much of the private good must be given up in 
order getting one more unit of the public good. 
Then, Efficiency conditions requires that the total amount 
individuals are willing to give up 
– the sum of the MRS – must equal 
the amount that they have to give up 
– the marginal rate of 
transformation.