Question:
Marginal cost of allowing one more person to use a pure public good is
(1) positive.
(2) negative.
(3) zero.
(4) infinite.
(5) increasing with an increase in consumption.
Correct Answer:
(3)
Answer Explanation:
A defining characteristic of a pure public good is “non-rivalry.” This means that once the good is provided (like national defense or a lighthouse), an additional person consuming it does not diminish its availability for others, nor does it cost the provider any extra money. Therefore, the marginal cost of an additional user is exactly zero.
Topic: Public Goods Year: 2019
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