For Certain Public Projects Such as Building a Dam on a River

question 205

Multiple Choice

For certain public projects such as building a dam on a river or a bridge to an island, what procedure is a government likely to use to determine what quantity of a public good should be supplied?

• A)It conducts public surveys to determine if consumers want the product.
• B)It checks to see what current spending can be eliminated, and how much of the public good can be supplied from the spending cut.
• C)It takes a vote in Congress.
• D)It evaluates the costs and benefits of producing the good.

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Definitions:

Sales Tax

A tax imposed by a government on sales of goods and services, typically calculated as a percentage of the purchase price.

Burden

In an economic context, this refers to the impact of a tax or other financial obligation on the parties involved, often measured in terms of how it affects their wealth or consumption.

Demand Function

A mathematical representation showing the relationship between the quantity demanded of a good and its price, along with other factors like income and prices of related goods.

Supply Function

A mathematical representation that shows the relationship between the quantity of a good supplied and its price.