An economist has estimated that the maintenance of a public park costs $25,000 a year and that the public park generates $30,000 a year in revenue for merchants near the park. From society's point of view, the maintenance of this park is
A. inefficient because the additional revenues generated by the park are so low.
B. potentially efficient because no one would be made worse off as a result of maintaining the park.
C. potentially efficient because the value of the gains exceed the value of the costs.
D. inefficient because everyone in the community pays taxes to support the park, but only the merchants near the park benefit.
Answer: C
You might also like to view...
If households save $40 billion less at each level of income and the marginal propensity to consume (MPC) is 0.8, the aggregate expenditure line will _____
a. intersect the 45-degree line at a real GDP of $40 billion b. shift upward by $40 billion c. shift downward by $40 billion d. shift upward by $200 billion because of the multiplier mechanism e. shift downward by $200 billion because of the multiplier mechanism
Which of the following would be studied in macroeconomics?
a. a drop in the price of personal computers b. an individual household's decision on how to allocate its spending power c. a rise in employment in movie theaters across the nation d. total output in the nation e. a local bank's increase in the interest rate offered on savings deposits