What Is the Optimal Level of Provision of a Public

question 29

Essay

What is the optimal level of provision of a public good?

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Definitions:

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a predetermined time frame.

Put Option

A financial agreement granting the bearer the option, without being compelled, to offload a predetermined quantity of a fundamental asset at an agreed-upon price during a designated period.

Futures Contract

A contractual arrangement committing to the purchase or sale of a specific financial asset or commodity at an agreed price, set to occur at a future date.

Short-Sale

A trading strategy that involves selling borrowed securities with the expectation of buying them back at a lower price to profit from a decline in their value.