Which of the Following Statements Is TRUE

question 208

Multiple Choice

Which of the following statements is TRUE?

• A) It is possible to observe how much people benefit from consuming an additional unit of a public good.
• B) It is difficult to get an accurate estimate of the marginal social benefits of public goods because individuals have an incentive to distort the truth about their willingness to pay.
• C) Individuals tend to underestimate the amount of a public good that they desire.
• D) It is straightforward to estimate the marginal social benefits of public goods.

---

Definitions:

Perfectly Competitive

Refers to a market structure where many firms sell identical products, and there are no barriers to new firms entering the market.

Market Price

The prevailing market price for buying or selling an asset or service currently.

Marginal Decision Rule

A principle in economics used to determine the optimal level of an activity; actions should be taken up to the point where marginal benefits equal marginal costs.

Marginal Revenue

Increment in income from the sale of one more product or service unit.