Cost-benefit analysis for a private good is facilitated by which of the following facts?
(i) buyers of a private good reveal the value they place on a good by the prices they are willing to pay
(ii) a private good cannot be rival
(iii) sellers of a private good are likely to purchase inputs in regulated markets
(iv) sellers of private goods reveal their costs by the prices they are willing to accept
A)(i), (ii), (iii) and (iv)
B)(i) and (iv) only
C)(ii) and (iii) only
D)(i), (ii) and (iv) only

Question

Quizplus · Accepted Answer

(i) and (iv) are correct because buyers reveal their valuation of a good through the prices they're willing to pay, and sellers indicate their costs by the prices they accept. Private goods are rival (contrary to statement ii), and there's no necessity for sellers to purchase inputs in regulated markets (contrary to statement iii).

Cost-Benefit Analysis for a Private Good Is Facilitated by Which