Which of the following are true in case of social goods : Public goods are non-rivalry in nature.…
A, B, D and E describe the standard public-finance treatment: nonrival consumption, collective budget decisions, mixed goods with spillovers, and incentives to conceal…
Choose your answer
Which of the following are true in case of social goods :
- Public goods are non-rivalry in nature.
- Efficient provision of social goods needs a political process of budget determination.
- Efficient provision of social goods involve horizontal rather than vertical addition of individual pseudo-demand-lines.
- Among purely private and purely social goods, there are mixed cases which generate benefit or cost externalities
- Individual consumers will not bid for social good, but will act as free-riders.
Answer and explanation
Correct answer D
A, B, D and E describe the standard public-finance treatment: nonrival consumption, collective budget decisions, mixed goods with spillovers, and incentives to conceal willingness to pay/free ride. C reverses the aggregation rule. Public-good marginal willingness-to-pay curves are added vertically because everyone consumes the same quantity; private-good demands are usually added horizontally. The categorical free-rider wording is a model prediction, not a claim that voluntary contributions never occur.
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UGC NET Economics