Asked by Marina Castelluzzo on Jun 26, 2024
Verified
Which statement is TRUE?
A) It is possible to observe how much people benefit from consuming an additional unit of a public good.
B) It is difficult to get an accurate estimate of the marginal social benefits of public goods because individuals have an incentive to distort the truth about their willingness to pay.
C) Individuals tend to underestimate the amount of a public good that they desire.
D) It is straightforward to estimate the marginal social benefits of public goods.
Marginal Social Benefits
The extra advantage to the entire community from using an additional unit of a product or service.
Public Goods
Goods that are non-excludable and non-rivalrous, meaning their use by one individual does not reduce availability to others.
- Master the concept of externalities and their ramifications on social cost and social benefit.
Verified Answer
TT
Taieshia TillmanJun 30, 2024
Final Answer :
B
Explanation :
This statement is true because individuals may not reveal their true willingness to pay for public goods, especially if they believe it will lead to higher taxes or fees. As a result, it can be difficult to accurately estimate the marginal social benefits of public goods.
Learning Objectives
- Master the concept of externalities and their ramifications on social cost and social benefit.