In: Economics
Identify the following statements as either true or false and
explain your reasoning.
1. Engineering costs always underestimate the true
social costs of a particular regulation.
2. For a freely provided public good, a consumer’s
willingness to pay for a small increase in the good or willingness
to accept payment for a small decrease in the good will provide
approximately the same value for the change in consumer
surplus.
3. An allocation is Pareto efficient if it is possible to
find another allocation that makes at least one person better off
without making another person worse off.
4. All situations that involve non-excludable goods must
lead to negative externalities.
5. The sustainability standard is just the sum of
individual happiness, regardless of the distribution of benefits
across generations.