Nonexcludable goods tend to be undersupplied because:
A. the free rider problem persists.
B. people do not pay the true value of the good.
C. people rarely willingly pay for something they could get for free, regardless of how much they value it.
D. All of these statements are true.
D. All of these statements are true.
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Assume Congress decides that oil companies are making too much profit and decides to increase the tax on oil companies for each gallon of gasoline produced. This would
A) guarantee a decrease in profits. B) guarantee an increase in profits. C) guarantee an increase in tax revenues. D) None of the above.
Why does a sports car cost more than a mountain bike?
A) because sports car manufacturers are greedier than mountain bike manufacturers B) because sports cars are priced higher in order to make them attractive as status symbols C) because more scarce resources are required to produce a sports car than to produce a mountain bike D) because mountain bike manufacturers know that their customers have relatively low incomes