If a Good Is Nonrival in Consumption and a Positive

question 86

Multiple Choice

If a good is nonrival in consumption and a positive price is charged by the supplier, then:

• A)more people want to use this good at the supplier's price.
• B)there is inefficiently low consumption of this good.
• C)free-riding occurs in this market.
• D)there is a socially optimal level of consumption.

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Definitions:

Bond Premium

The amount by which the market price of a bond exceeds its principal amount or face value.

Effective Interest Rate

The actual return on an investment, taking into account the effect of compounding interest, as opposed to the nominal rate.

Interest Expense

The cost incurred by an entity for borrowing funds; this expense is reported on the income statement.

Stated Interest Rate

The nominal interest rate stated on a financial instrument, such as a loan or bond, without adjustment for compounding or market conditions.