An environmental awareness program was launched in a certain community and all residents in the community were asked to contribute to its functioning. After a month, the program had to be discontinued due to a lack of funds
Why did the program not receive sufficient funds? Explain your answer.
A community program such as the one mentioned here is an example of a public good. Like all public goods, it is non-excludable and non-rival in consumption. None of the residents in the community can be prevented from enjoying the benefits of the program and the enjoyment of its benefits by one individual does not reduce the amount enjoyed by others. Because nobody can be excluded from its consumption, people can enjoy the benefits of the program without paying for it. Therefore, nobody in the community had an incentive to contribute to its functioning. As a result, the program had to be discontinued due to a lack of funds. This is an example of the free-rider problem in the consumption of public goods.
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The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the
A. the less an additional unit of capital adds to production. B. less is produced. C. the more an additional unit of capital adds to production. D. less production is wasted.
An optimal level of output is one at which marginal profit > 0.
Answer the following statement true (T) or false (F)
If government policy makers were worried about the inflationary potential of the economy, which of the following would not be a correct fiscal policy change?
a. Increase consumption taxes b. Increase government purchases of goods and services. c. Decrease government purchases. d. None of the above.
The real interest rate is the:
A. the interest rate charged on a loan in dollar terms. B. market interest rate. C. annual percentage increase in the purchasing power of a financial asset. D. annual percentage increase in the nominal value of a financial asset.