"When it comes to public goods, individuals do not reveal their true preferences because it is not in their self interest to do so." Evaluate this statement
What will be an ideal response?
The statement is true. For example, in the case of a private good such as a hamburger, a consumer either reveals her willingness to pay by purchasing the good at the market price or goes without it. This is not the case with a public good. Once produced, individuals cannot be excluded from consuming the good even if they have not paid for the good. Therefore, it is in a consumer's interest not to reveal her true preferences for the good.
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Which of the following is NOT a contributing factor into why the HPAE were able to rapidly accumulate physical and human capital?
A) A stable macroeconomic environment meant low inflation B) Loans from multilateral institutions such as the IMF, the World Bank, and regional development banks C) The demographic transition meant that the proportion of their population working was higher. D) A rapid rise in income made greater amounts of savings possible.
On the diagram above, show the new steady-state capital-labor ratio that results from a decrease in the saving rate. Can you say what has happened to the equilibrium level of consumption per worker?
What will be an ideal response?
The Tragedy of the Commons results when a good is
a. rival in consumption and not excludable. b. excludable and not rival in consumption. c. both rival in consumption and excludable. d. neither rival in consumption nor excludable.
What happens to marginal productivity as workers who are equally good at their job are added to a firm?
a. The increase in workers will eventually cause marginal product to fall. b. Marginal product will rise at a steady rate. c. Marginal product will neither rise nor fall. d. Product quality will improve as the new workers gain experience.