Suppose the Government Is Producing a Public Good

question 172

Multiple Choice

Suppose the government is producing a public good.If the marginal benefit of the last unit of a public good produced is greater than the marginal cost of that unit,to achieve the efficient amount of production,what should be done?

• A) The government should produce more units.
• B) The government should cease production.
• C) Private firms should take over the production and sale of the good.
• D) Nothing, because the government is already producing the efficient quantity of the public good.
• E) The government should produce fewer units.

---

Definitions:

Equipment Sold

The process of disposing or selling business equipment, recorded as a transaction that may impact a company’s financial statements.

Prepaid Expense

An expense that has been paid in advance and is recorded as an asset until it is actually incurred.

Accrued Liabilities

Obligations that a company has incurred during a specified accounting period but has not yet paid out, often appearing as current liabilities on the balance sheet.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.