When the free rider problem is present in a market the good:
A. is not excludable.
B. is rival in consumption.
C. will be underconsumed.
D. will be oversupplied.
Answer: A
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Why is it that the private market fails to provide the efficient quantity of a public good?
a. because it is impossible to force those who benefit from the good to pay for it b. because public goods are always large-scale projects that require government financing c. because there are external costs associated with the provision of a public good d. because there are uninsurable risks associated with a public good
Which of the following statements is correct?
A) PPP is a theory of exchange rate determination. B) Inflation differentials cause changes in exchange rates. C) PPP is an equilibrium relationship between two endogenous variables. D) PPP, or the law of one price, should hold well for individual goods.