Describe the rationale behind supply and demand analysis for public goods
Please provide the best answer for the statement.
With a private good you add together the quantities demanded people are willing to pay at each possible price, whereas with a public good you add together the prices people are willing to pay for the last unit of the public good at each possible quantity demanded. The demand curve for a public good slopes downward because of the law of diminishing marginal utility. The supply curve for a public good is up sloping because of the law of diminishing returns. The demand curve for a public good is, in essence, a marginal benefit curve; the supply curve for a public good reflects rising marginal costs. The optimal quantity of a public good will be shown by the intersection of the collective demand and supply curves, which means that the marginal benefit of the last unit equals that unit’s marginal cost.
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In the equation Y = (1/1 – b + v)(a + I + G + X ? u), the term (1/1 – b + v) is referred to as the
a. level of autonomous expenditures. b. autonomous expenditure multiplier. c. balanced budget multiplier. d. tax multiplier.
Innovation is the act of generating an idea for a new product
a. True b. False Indicate whether the statement is true or false
A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has
a. some control over both the price of pretzels and the wage it pays to its workers. b. no control over the price of pretzels but some control over the wage it pays to its workers. c. some control over the price of pretzels but no control over the wage it pays to its workers. d. no control over either the price of pretzels or the wage it pays to its workers.
A budget deficit
a. occurs when government receipts are less than spending. b. occurs when government spending is less than receipts. c. occurs when government receipts are equal to spending. d. is the accumulation of years of government overspending.