Question

1. A pure public good is:

a. one that can easily be sold by the unit.

b. one that is nonrival in consumption.

c. one whose benefits are not subject to exclusion.

d. both (b) and (c)

2. The marginal cost of providing a certain quantity of a pure public good to an additional consumer after it is provided to any one consumer is:

a. zero.

b. positive and increasing.

c. positive and decreasing.

d. positive and constant.

3. The nonrival property of pure public goods implies that the:

a. benefits enjoyed by existing consumers decline as more consumers enjoy a given quantity of the good.

b. benefits enjoyed by existing consumers are unaffected as more consumers enjoy a given quan-tity of the good.

c. good cannot be priced.

d. marginal cost of producing the good is zero.

4. The efficient output of a pure public good is achieved at the point at which:

a. the marginal benefit obtained by each consumer equals the marginal social cost of producing the good.

b. the sum of the marginal benefits of all consumers equals the marginal social cost of producing the good.

c. the marginal benefit of each consumer equals zero.

d. the marginal social cost of producing the good is zero.

e. both (c) and (d)

ASAP

Answer 1

ANS 1

Option D. Both B and C , A pure public good is a good which has no rival also its consumption is not subject to exclusion , an example can be take of street light, its consumption cannot be avoided if one is travelling in streets and also its consumption does not affect other people.

ANS 2

Option B. positive and decreasing , as the public goods are used by the public and the usage of one unit doesnt effect the quantity available for the other people due to which the marginal cost decreases constantly with every other usage and is never negative.

ANS 3

Option B . benefits enjoyed by existing consumers are unaffected as more consumers enjoy a given quantity of the good. It means that the good's quantitry is not affected by the consumption of any person, like the consumption of street light doesnt affect the consumption of other people.

ANS 4

Option A. The marginal benefit obtained by each consumer equals the marginal social cost of producing the good., The public goods include the marginal cost of externalities too and the point where marginal social benefit matches the the marginal cost , it is the point of efficient output.