Question

please explain carefully

Groves-Clarke tax a) Is paid by each person who declares wrong net value of the public good b) Is paid by each pivotal person, who changes the supply decision. c) Is paid by each person who declares the highest net value of the public good d) Allows for buying the public good at the lowest price e) None of the above Which of the following is true? a) Pareto optimal amount of a public goods can be determined by majority vote b) "Free Riding" is a consequence of cooperation c) Because of high production costs public good can be produced only by a public firm. d) Because of the "adverse selection" the Pareto optimal amount of a public goods is difficult to define e) None of the above

Answer 1

Q1. Option c

It is a tax that makes it rational for individuals to truthfully reveal their private valuations of a public good

Q2. Option d

Adverse selection leads to inefficient production of good