Suppose That a Firm Plans to Provide Defense Against Asteroids

question 61

Multiple Choice

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

• A) Most people will find it in their self-interest to pay the firm to protect the earth.
• B) Asteroid protection is a private good, so the firm will make a lot of profit.
• C) In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense.
• D) Most people will not pay a firm for asteroid defense.

---

Definitions:

Bonds

Debt securities issued by corporations or governments to raise funds, whereby the issuer owes the holders a debt and is obliged to pay interest.

De Jure Corporation

A corporation that is fully in compliance with all state laws and therefore officially recognized as a legal entity.

De Facto Corporation

A company that operates as if it were legally incorporated, despite not having completed the necessary incorporation processes, and may thus be treated as a corporation in many contexts.

Shareholders

Owners of shares in a company, giving them rights to vote on company matters and receive dividends.