Public goods represent a market failure because
A. there is incomplete information regarding their quality.
B. they are provided by firms with market power.
C. by their very nature they are nonexcludable and nonrival, which makes it difficult for the private sector to supply them profitably.
D. positive externalities are created through their production.
Answer: C
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Suppose the U.S. GDP growth rate is slower relative to other countries' GDP growth rates. This will
A) shift the aggregate demand curve to the left. B) move the economy down along a stationary aggregate demand curve. C) shift the aggregate demand curve to the right. D) move the economy up along a stationary aggregate demand curve.
In which of the following econometric problems do we find Durbin-Watson statistic being far away from 2.0?
a. the identification problem b. autocorrelation c. multicollinearity d. heteroscedasticity e. agency problems
When a binding price floor is imposed on a market to benefit sellers,
a. every seller in the market benefits. b. all buyers and sellers benefit. c. every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers. d. some sellers will not be able to sell any amount of the good.
Which of the following restrictions implies that investment exceeds private saving for a closed economy?
a. The economy has no government. b. The economy's government is running a budget deficit. c. The economy's government is running a budget surplus. d. No restriction is necessary; investment and private saving are equal for all closed economies.