Efficient production of a public good requires
a. that individuals pay for such goods according to benefits received
b. that each individual's MRS be equal to the RPT of public goods for private goods.
c. that the sum of individuals' MRSs be equal to the RPT of public goods for private goods.
d. that governments produce at the low point of the average cost curve for the public good.
c
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Suppose capital and labor must be used in fixed proportions to produce widgets and that the price elasticity of demand for widgets is zero. Then the wage elasticity of demand for labor by widget makers will be:
a. +1. b. -1. c. 0. d. infinite.
In a congressional debate about agricultural price supports, senators, members of congress, and other experts made the following four statements. Which of these is a normative statement?
a. "Price supports are important because America should preserve the small family farm." b. "Without price supports, the price of wheat and corn will fall by over twenty percent." c. "The decline in commodity prices caused by the removal of price supports will result in fewer, larger farms." d. "The decline in commodity prices caused by the removal of price supports will reduce the number of tractors sold in the United States."