Author Question: We can explain the paradox of value as follows: The consumer surplus from water, which is cheap, is ... (Read 58 times)

PhilipSeeMore · **on:** Jun 29, 2018

We can explain the paradox of value as follows: The consumer surplus from water, which is cheap, is ________ than the consumer surplus from gold, which is expensive; the total utility from gold is ________ than the total utility from water; and the

marginal utility per dollar spent on water ________ the marginal utility per dollar spent on gold. A) greater; less; equals
B) smaller; less; equals
C) greater; greater; greater than
D) less; greater; greater than

Question 2

Under what conditions will the political process provide an inefficient amount of a public good?

What will be an ideal response?

onowka · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

The government will provide an inefficient amount of a public good when voters are rationally ignorant of the marginal social benefits and marginal social costs of the good. In this case, bureaucrats, intent on maximizing the size of their budgets, will provide an inefficiently large quantity of the good.