What is the optimal level of provision of public goods?
What will be an ideal response?
The optimal level of provision of public goods is the level at which resources are drawn from the production of other goods and services only to the extent that people want the public good and are willing to pay for it. At this level, society's willingness to pay per unit is equal to the marginal cost of producing the good.
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When a firm produces 1 unit of output total cost is €350. When the firm produces 2 units of output, total cost is €450. The marginal cost of producing the second unit of output is:
(a) €100. (b) €150. (c) €250. (d) €350.
A profit-maximizing perfectly competitive firm must decide:
A. only on which industry to join, taking price and output as fixed. B. both what price to charge and how much to produce. C. only on how much to produce, taking price as fixed. D. only on what price to charge, taking output as fixed.
The economy is:
A. complex, and it operates under uncertain rules. B. complex, though it operates under clear rules. C. simple, and it operates under clear rules. D. simple, though it operates under uncertain rules.
The economy experiences an increase in the price level and a decrease in real domestic output. Which of the following is a likely explanation?
A. Productivity has increased B. Input prices have increased C. There has been an increase in government spending D. Government regulations have been reduced