A fundamental reason that governments provide public goods is that
A. negative externalities are part of the production process of those goods.
B. those goods are perfectly divisible.
C. those goods are subject to the free-rider problem.
D. public goods are merit goods.
Answer: C
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The above (incomplete) table provides information about the relationships between labor and various product measures. The average product of the fourth unit of labor
A) exceeds the marginal product of the fourth unit of labor. B) is less than the marginal product of the fourth unit of labor. C) is equal to the marginal product of the fourth unit of labor. D) is equal to 4.0.
The cost borne by a producer in the production of a good or service is called
A) internal cost. B) social cost. C) public cost. D) private cost.
A reduction in government spending causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________, everything else held constant
A) rise; LM; right B) fall; IS; left C) fall; LM; left D) rise; IS; right
The current account surplus is not
A) the trade balance. B) the excess of national savings over investment. C) private saving less government deficit. D) output less taxes and trade deficit.