Refer to the Supply and Demand Graph for a Public

question 65

Multiple Choice

Refer to the supply and demand graph for a public good.Line segment ad represents the amount at Q₁ by which the:

• A)marginal benefit of this public good is less than the marginal cost.
• B)total benefit of this public good is less than the total cost.
• C)marginal benefit of this public good is greater than the marginal cost.
• D)total benefit of this public good is greater than the total cost.

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Definitions:

Perpetuity

A financial term referring to a type of annuity that pays a series of payments indefinitely, with no end.

10-Year Bond

A financial instrument issued by governments or corporations promising to pay back borrowed funds with interest over a ten-year period.

Perpetuities

Financial instruments or investments that provide a never-ending stream of cash flows with no expiration date.

Market Price

The current price at which an asset or service can be bought or sold.