Crowding Out Occurs When Public Provision of a Good Substitutes

question 6

Multiple Choice

Crowding out occurs when public provision of a good substitutes for private provision.

• A) True
• B) False
• C) Uncertain

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Definitions:

Third-Degree Price Discrimination

A pricing strategy where different prices are charged to different groups of consumers for the same product, based on elasticity of demand.

Monopoly Power

The ability of a single seller to set prices and control the market for a good or service without significant competition.

Peak-Load Pricing

Practice of charging higher prices during peak periods when capacity constraints cause marginal costs to be high.

Two-Part Tariff

Form of pricing in which consumers are charged both an entry and a usage fee.