Which of the following is a valid reason for the government rather than the market to finance the provision of certain economic goods and services?
a. When the government provides economic goods, they are free; costs are incurred when such goods are provided by private firms.
b. Voters tend to be better informed than market consumers are
c. Decision makers in the market sector are motivated by self-interest, whereas political decision makers are primarily motivated by altruism (the desire to help others).
d. Public goods tend to be undersupplied through the market since it is difficult for potential suppliers to withhold such goods from nonpaying consumers; the government can use taxes to overcome this problem of nonpayment.
d
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The bond supply curve slopes up because
A) interest rates rise as bond prices rise. B) when bond prices are high, inflation is high. C) the lender is willing and able to offer more bonds when the price of the bond is low. D) the borrower is willing and able to offer more bonds when the price of the bond is high.
Homer's Donut Shoppe has the production function q = 10L +20L2 - 5L3. The average product of labor is
A) AP = 10 + 20L - 5L2 B) AP = 10 + 40L - 15L2 C) AP = 10L D) AP = 10 + 20L
The most important determinant of the elasticity of supply is
A) whether the good is a durable good or a nondurable good. B) the price of the good. C) the time period firms have to adjust to the new price. D) the proportion of the good in the budget of consumers.
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. makes John a free rider c. results in an efficient market outcome for both parties since both benefit d. creates a positive externality for Christine e. was poorly done