Which of the following is true of public goods?
a. They can only be supplied by the government.
b. They will tend to be supplied efficiently by the private sector when markets are competitive.
c. It is difficult to establish a one-to-one link between payment and receipt of such goods.
d. From an efficiency standpoint, private markets will tend to supply an excessively large amount of public goods.
C
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Two advisors to the president have given their policy recommendations, and they are in disagreement. Why do these economists disagree?
A. Because they do not have all relevant information about the problem B. Because they disagree on the nature of some cause–effect relationship C. Because they have different values and opinions D. All of the above are reasons for disagreements among economists.
A firm has explicit costs of $110,000 and total revenue of $120,000. Which of the following is true about the firm?
A) The firm might be making an economic profit but we need more information about implicit costs to know for sure. B) The firm is definitely making an economic profit because it must be minimizing its opportunity cost. C) The firm is incurring an economic loss if implicit costs are $10,000. D) The firm is making a normal profit if implicit costs are $0. E) The firm may be making an economic profit but only if implicit costs are negative.
To maximize the economic pie, government should
A) provide only those public goods whose benefits outweigh their costs. B) provide no public goods. C) provide only those public goods whose costs outweigh their benefits. D) provide all possible pure public goods.
Refer to the scenario above. Suppose there are several other bidders in the auction. Roger will win the auction only if ________
A) all the other bidders bid above $625 B) all the other bidders bid below $625 C) all the other bidders are risk-lovers D) all the bidders are risk-averse