If Benefit Functions for a Public Good Could Be Identified

question 5

Multiple Choice

If benefit functions for a public good could be identified accurately, incremental benefits would be measured as

• A) the area under the MSB function between the pre- and post-policy abatement levels.
• B) the area under the TSB function between the pre- and post-policy abatement levels.
• C) a horizontal distance on the MSB model corresponding to the pre- and post-policy abatement levels
• D) none of the above

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, which can be seen as the cost of borrowing money or the return on saving.

Rule Of 70

A method used to estimate the number of years it will take for a variable to double, calculated by dividing 70 by the annual growth rate.

Interest Rate

The proportion of a specified sum that is added as a charge for borrowing it, usually stated as an annual rate.

Utility Function

A mathematical representation describing how a consumer ranks different bundles of goods according to levels of satisfaction.