The market demand for a public good is the ________________________. To choose t
ID: 1113706 • Letter: T
Question
The market demand for a public good is the ________________________. To choose the optimal level of the public good, the government should set the market demand for the public good equal to the ________________ of producing it.
A.
vertical sum of individual demand curves; marginal cost
B.
vertical sum of individual demand curves; average cost
C.
horizontal sum of individual demand curves; average cost
D.
horizontal sum of individual demand curves; marginal cost
Which of the following statements most clearly reflects the Tiebout hypothesis?
A.
The efficient mix of public goods can only be achieved by an authoritarian government.
B.
A family chooses to live in a town with more parks and better police protection, but higher property taxes.
C.
Taxpayers refuse to pay higher taxes, forcing local government to become more efficient.
D.
Property taxes fall once a public good is paid for.
Common resources are characterized as being
A.
rival in consumption and nonexcludable.
B.
rival in consumption and excludable.
C.
nonrival in consumption and excludable.
D.
nonrival in consumption and nonexcludable.
Assume a competitive market in which a chemical plant emits harmful pollutants into the air. If the firm only considers the marginal cost of production,
A.
it will produce more than the efficient output level, because social marginal cost is greater than the marginal cost of production.
B.
it will still produce the efficient output level, because it is producing where price is equal to marginal cost.
C.
it does not incur the full cost of its actions and should be fined.
D.
it will produce less than the efficient output level, because social marginal cost is greater than the marginal cost of production.
Explanation / Answer
1. The market demand for a public good is the ________________________. To choose the optimal level of the public good, the government should set the market demand for the public good equal to the ________________ of producing it.
A.vertical sum of individual demand curves; marginal cost
2.Which of the following statements most clearly reflects the Tiebout hypothesis?
B.A family chooses to live in a town with more parks and better police protection, but higher property taxes.
3.Common resources are characterized as being
A.rival in consumption and nonexcludable.
4.Assume a competitive market in which a chemical plant emits harmful pollutants into the air. If the firm only considers the marginal cost of production,
A.it will produce more than the efficient output level, because social marginal cost is greater than the marginal cost of production.
5.
i) Drunk driving- 3. -Legal rules and procedures
ii)Airport landing patterns and hours- 5 - Direct regulation
iii)A neighbor dumps trash in your yard- 2- Bargaining and negotiation
iv)Air pollution caused by the electric power industry- 4- Selling or auctioning rights
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