What can we do to deal with the externalities associated with public goods and common resources?
a) Private markets will lead to an efficient allocation of resources.
b) Government intervention can potentially raise economic well-being.
c) Private markets will correct for the gain or loss to consumer surplus.
d) Government intervention can completely eliminate the free-rider problem.
Ans: b) Government intervention can potentially raise economic well-being.
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What are the main differences between cash transfer payments and payments in-kind? Excluding paternalistic justifications, is one generally preferable to the other? Why or why not?
What will be an ideal response?
Consumer surplus is
a. the amount by which quantity supplied exceeds quantity demanded at the current market price b. the amount by which quantity demanded exceeds quantity supplied at the current market price c. the change in total utility derived from a one-unit change in the consumption of a good d. the difference between the price of the good paid by the consumer and the costs of production to the seller e. the difference between the maximum amount that a consumer is willing to pay for a given amount of a good and the amount that the consumer actually pays