When Public Goods Are Provided by Private Firms, with No

question 150

Multiple Choice

When public goods are provided by private firms, with no government involvement, we expect that:

• A) the equilibrium quantity will be less than would be efficient.
• B) the equilibrium quantity will be greater than would be efficient.
• C) the equilibrium quantity will be the efficient quantity.
• D) their profits will be excessive.

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Definitions:

Marginal Utility

The supplementary enjoyment or value obtained by consuming an extra unit of a good or service.

Total Utility

The overall satisfaction or happiness a consumer derives from consuming a certain quantity of goods and services.

Marginal Utility

The extra benefit or utility gained from acquiring or consuming an additional unit of a product or service.

Utility Per Dollar

The amount of satisfaction or usefulness gained per unit of currency spent, used to measure consumer value.