The price charged for a nonrivalrous good is socially optimal if:
A)the price is zero.
B)the price is just enough so that revenues equal the production costs.
C)the price is above zero but less than the marginal cost.
D)the price is equal to the MC of producing the good.

Question

Quizplus · Accepted Answer

Nonrivalrous goods can be consumed by one person without preventing the consumption of the good by another. The social optimum for such goods is achieved when they are provided free of charge, as their marginal cost of providing the good to an additional person is zero. Charging a price would only prevent some people from consuming the good without reducing the cost of providing it, leading to an inefficient allocation of resources.

The Price Charged for a Nonrivalrous Good Is Socially Optimal