A government will increase the supply of a public good as long as the marginal benefit exceeds the marginal cost of supplying the good.

Question

Quizplus · Accepted Answer

Government's decision to increase the supply of a public good is based on the comparison between the marginal benefit and the marginal cost. If the marginal benefit is higher than the marginal cost, the government will increase the supply of the public good. If the marginal cost is higher than the marginal benefit, the government will not increase the supply. Therefore, the statement is true.

A Government Will Increase the Supply of a Public Good