Question

True or False

a. All situations that involve non-excludable goods must lead to negative externalities.

True or False

b. Engineering costs always underestimate the true social costs of a particular regulation

True or False

c. For a freely provided public good, a consumer’s willingness to pay for a small increase in the good or willingness to accept payment for a small decrease in the good will provide approximately the same value for the change in consumer surplus.

Answer 1

1 ans ) false

Explanation: Non excludable goods always may not lead to negative externalities.public goods may lead to positive externalities.Excludable goods are private and non excludable goods are related to public goods

2 ans ) true

Explanation: social costs will be low and are not included in cost of production calculated.Engineering costs always underestimate this

3 ans) True

Explanation: If price of good decreases consumer surplus increases and if price of good increases then consumer surplus decreases