The Three Problems Facing a Government Trying to Determine the Optimal

question 3

Multiple Choice

The three problems facing a government trying to determine the optimal quantity of a public good include all of the following EXCEPT:

• A) preference revelation because individuals may not tell the government their true valuation of the public good.
• B) preference knowledge because individuals may not know their true valuation of the public good.
• C) preference implementation because it is hard to produce public goods in practice.
• D) preference aggregation because it is difficult to add up the preferences of millions of citizens.

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Definitions:

Insight

The capacity to gain an accurate and deep understanding of a person or situation, often leading to problem-solving or creative thinking.

Affect Heuristic

A mental shortcut that allows people to make decisions and solve problems quickly and efficiently based on their emotions.

Disgusted

A feeling of strong disapproval or revulsion.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.