What condition must be satisfied for the optimal level of a public good to be provided? Explain the problem of the optimal provision of public goods

What will be an ideal response?


The optimal level of provision of a public good occurs when society's willingness to pay for the additional unit is equal to the marginal cost of producing the good. The problem with the optimal provision of public goods is that it is impossible to know people's preferences and therefore what they are willing to pay.

Economics

You might also like to view...

The calculation of GDP using the income approach EXCLUDES

A) rent. B) interest. C) environment quality. D) wages. E) profit.

Economics

What is meant by product differentiation?

What will be an ideal response?

Economics

An increase in government spending

A) increases consumption and output. B) increases consumption, decreases output. C) decreases consumption, increases output. D) decreases consumption and output.

Economics

What is protectionism in the domestic economy?

a. forcing foreign consumers to subsidize domestic producers b. forcing producers to subsidize consumers c. forcing consumers to subsidize producers d. forcing foreign consumers to subsidize foreign producers

Economics