Consider a Non- Rivalrous Good, Like National Defence, Provided by the Government

question 84

Multiple Choice

Consider a non- rivalrous good, like national defence, provided by the government. At the socially optimal level of provision of this good, the marginal

• A) cost of provision of the last unit of the good is more than all consumers' combined marginal willingness to pay.
• B) sacrifice society needs to make to supply the last unit of the good is more than each consumer's marginal willingness to pay.
• C) cost of provision of this good is zero.
• D) cost of provision of the last unit of the good is equal to all consumers' combined marginal willingness to pay.
• E) cost of provision of the last unit of the good is equal to the consumers' marginal willingness to pay.

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Definitions:

Payback Period

The payback period is the time required for an investment to generate cash flows sufficient to recover its initial cost.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or profits.

Depreciated

The process of allocating the cost of a tangible or fixed asset over its useful life, reflecting its consumption, wear, and tear, or obsolescence.

Net Cash Flow

The difference between a company's cash inflows and outflows in a given period.