Examples It may be difficult to get consumers of a public go

Examples It may be difficult to get consumers of a public good to pay their \"Lindahl price\" for the good because A. public goods must be paid for by the government. some individuals may find it beneficial to free-ride on the payments of others rather than pay according to their marginal benefit for the efficient quantity individuals may have an incentive to understate their true valuation of the public good. Both B and C. All of the above. B. C. D. E.

Solution

1. The answer is D.) both B and C as lindahl price is the modelled price to be paid by consumers of public good as per their marginal benefit and there are possibilities that consumer might undercommit or not commit for the payment at all.

2. B.) A messu roomate

Coase theorem states that a pareto efficient allocation could be achieved in case of an externality if trade is possible in the externality with low transaction costs. Hence, out of the given choices, trade in externality is possible in all but transaction costs can be huge and it can be difficult to identify the culprits. Only in the case of a messy rommate, the transaction costs could be least as the player us easily identified and hence an agreement incorporating coase theorem could lead to an efficient solution