Answer the following statement(s) true (T) or false (F)

1. Nonexcludability refers to the possibility that the benefits of consumption can be shared.
2. The market demand for a public good such as environmental quality is found as the horizontal sum of all the individual demands for that good.
3. If the market for a public good is comprised of two consumers, 1 and 2, who have individual demands of p1 = 100 – 0.2QD and p2 = 250 – 0.5QD, then the market demand function would be P = 350 – 0.7QD.
4. If the third-party effects of a good generate benefits to a third party, it is a positive externality.
5. If MSC = 40.0 + 0.25Q, and MPC = 40.0 + 0.14Q, then production is associated with an externality specified as MEC = 40.0 + 0.36Q.


1. False
2. False
3. True
4. True
5. False

Economics

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