The Efficient Price to Charge Consumers for Their Use of a Public

question 14

Multiple Choice

The efficient price to charge consumers for their use of a public good is

• A)equal to the average per-person cost of providing this good.
• B)equal to the cost of providing the good to one additional consumer.
• C)equal to the highest individual marginal benefit from consuming a unit of the good.
• D)that price that prevents free riding by some consumers.
• E)equal to the price that the free market would achieve.

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset evenly over its useful life.

Simple Rate Of Return

A financial metric that calculates the increase in profits or savings expected from an investment as a percentage of the initial investment cost.

Annual Cost Savings

The reduction in costs achieved during a fiscal year, enhancing the organization's profitability.

Discount Rate

This rate is applied within discounted cash flow analysis to determine the contemporary monetary worth of future cash movements.