How is the efficient quantity of public goods determined?
What will be an ideal response?
The efficient quantity of a public good is determined in the same way as the efficient quantity of any good: by comparing marginal social cost and marginal social benefit, and producing where one equals the other. The marginal social cost of a public good is calculated similarly as the marginal social cost for a private good. It is based on the cost of producing one more unit of the good. The marginal social benefit, however, is calculated differently for a public good than for a private good. For a public good, the economy's marginal social benefit is determined by summing the individual marginal benefits at each quantity of the public good. Once the marginal social cost and marginal social benefits are known, the efficient quantity is equal to the quantity such that the marginal social cost equals the marginal social benefit.
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Zero pollution represents an efficiency standard
a. True b. False Indicate whether the statement is true or false
John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for $5,000 more than she could have before. John's house painting:
a. creates a negative externality for Christine. b. shows John is a free rider. c. results in an efficient market outcome for both. d. creates a positive externality for Christine. e. was poorly done.
If the CPI is 220 and nominal income is $37,000, approximately what does real income equal?
A) $81,400 B) $16,818 C) $76,500 D) $44,118
If there were no usury law, the interest rate would be _____%.
A. 12
B. 14
C. 16
D. 18