Due to the Existence of External Benefits Associated with Public

question 36

Multiple Choice

Due to the existence of external benefits associated with public goods,

• A) private markets will lead to an efficient allocation of resources.
• B) government intervention can possibly improve on private market outcomes.
• C) private markets will correct for the underproduction of the good.
• D) the free-rider problem is eliminated.

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Definitions:

Average Rate of Return

A financial metric used to evaluate the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.

Annual Income

The total earnings or revenue generated by an individual or business in one fiscal year before any deductions.

Capital Projects

Large, long-term investments undertaken to create, expand, or replace a company's physical assets.

Cash Payback Period

The duration it takes for the earnings from an investment to cover the initial amount invested.