How does a government-sponsored good differ from a public good?
What will be an ideal response?
A public good is characterized by the fact that consumption is not rival and by the presence of the free-rider problem. Government-sponsored goods are private goods that the political process has deemed desirable.
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If the demand for a monopoly's output shifts leftward, the change in quantity produced is NOT predictable because
A) the monopoly is a profit maximizer. B) the monopoly is a price taker. C) the monopoly has no supply curve. D) the monopoly's marginal cost curve might not be upward sloping.
Refer to the above figure. If the relevant aggregate demand curve was AD2, the government could do all of the following to close the existing gap EXCEPT
A) increase government spending on roads. B) reduce marginal tax rates. C) reduce corporate taxes. D) reduce defense spending.