Private Provision of Public Goods

question 26

Multiple Choice

Private provision of public goods

• A)fails because the private firm will always go broke.
• B)succeeds because public provision is often more costly.
• C)succeeds if consumers expect to obtain a benefit from the consumption of the public good.
• D)fails because of the free-rider problem.
• E)fails because private firms generally charge higher prices than public firms,and therefore lose customers.

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Definitions:

Following Year

The year that comes after the current year, often in the context of planning or forecasting.

Pure Play Method

A valuation method that compares a company to others within the same industry or sector with a single focus or product line.

Firm's Cost of Capital

The minimum return that a company must earn on its investments to maintain its market value and satisfy its creditors and investors.

Specific Division

A distinct business unit within a larger organization, often focused on a particular product line or market segment.