B If good is ontiral in ten sumptio but ex cutale like poyrn

B: If good is on-tiral in ten sumptio but ex cutale, like poy-r-new -mones tti hefhCient to charge on fumers Po tive frice for the goo O D Select ore true h. Falp.

Solution

Among various types of goods on the basis of rival or non rival and excludable and non-excludable, those goods which are non-rival in consumption but excludable, are known as Artificially Scarce Goods. They are non rival, ie one\'s use of that good doesn\'t affect another, and hence their efficient price is zero. The reason is zero marginal cost. The artificially scarce goods, like pay per movies have no marginal cost, ie their extra produce isn\'t going to take any cost. In case of pay per view movies, The producers do not have any cost to show it to more people. But since they are excludable (in case of pay per view movie, via internet technology), producers charge a price. In principle, price, which is marginal revenue, should be equal to marginal cost, otherwise deadweight loss arises. But excludability gives producers a power to charge a positive price.

Hence it is inefficient to charge positive price for this kind of good, as the marginal cost is zero, the efficient price is also zero. The answer is

True.