How does a public good differ from a quasi-public good? In your answer give an example of each type of good
What will be an ideal response?
A pubic good is: (a) nonrivalrous—one person's consumption of the good does not prevent anyone else from consuming it; (b) nonexcludable—anyone can consume the good without paying for it. An example of a public good is national defense. A quasi-public good is excludable, but nonrival. This means that people who do not pay for the good do not consume it, but one's person's consumption does not affect the consumption of anyone else. An example of a quasi-public good is a toll road.
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Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs. The company earns $1.4 million in revenues and has $3.7 million in net worth. Based on this information, what is the accounting profit for Harry's Hookas?
A) $200,000 B) $700,000 C) $900,000 D) $1.1 million
If a production process generates pollution, then a competitive market will produce more of the good than is socially optimal because
A) firms take all costs into consideration. B) firms incur all costs of production but ignore some of them. C) firms ignore the costs of production that they do not incur. D) firms set price equal to social marginal cost.