Use the Following to Answer Questions

question 216

Multiple Choice

Use the following to answer questions:
Scenario: Ben and Nick
Ben and Nick are the only members of a community. They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known. In addition, the marginal social cost (MSC) of the public good is known and is constant.
-(Scenario: Ben and Nick) Look at the figure and scenario Ben and Nick. At all levels of provision of the public good:

• A) Ben places a higher value on the public good than Nick.
• B) the MSC is less than the MSB.
• C) the optimal level is not attained.
• D) the private marginal benefits cannot be determined.

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Definitions:

Capitalized

The process of recording a cost or expense as an asset on the balance sheet, rather than immediately expensing it, typically to spread the cost over its useful life.

Double-Declining-Balance Method

An accelerated depreciation method that doubles the normal depreciation rate, reducing the carrying value of an asset more quickly.

Patents

Government-granted exclusive rights to an inventor or assignee for a fixed period of time, in exchange for the public disclosure of an invention.