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Public Finance Questions: Pure Public Goods

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1. The nonrival property of pure public goods implies that the, a) benefits enjoyed by existing consumers decline as more consumers enjoy a given quantity of the good; b) benefits enjoyed by existing consumers are unaffected as more consumers enjoy a given quantity of the good; c) good cannot be priced; d) marginal cost of producing the good is zero.

2. A community currently hires 10 security guards per week to patrol their neighborhood. Each security guard costs $300 per week. Assuming that the tax sharing arrangement agreed to results in each of 300 voters paying the same tax share, each voter pays a weekly tax bill of: a) $1; b) $3; c) $10; d) $30

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Hello Student,

For the first question note that, a public good is an item whose consumption is not decided by the individual consumer but by the society as a whole, and it is often financed by taxation. Also note that public goods usually have two main properties - that is, ...

Solution Summary

This solution include reponses to two multiple choice questions related to pure public goods and tax sharing arrangements.