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xxMikexx [17]
3 years ago
14

Because public goods are:

Business
1 answer:
nadezda [96]3 years ago
6 0

Answer:

The correct answer is

not excludable, people have an incentive to be free riders. (b.)

Explanation:

Excludability of a good or service is a property of the good or service that makes it impossible for a consumer who has not paid for it to have access to it, hence, a non-excludable good or service is one to which it is impossible to prevent access by people who have not paid for it.

Based on whether goods are excludable or non-excludable, goods can be divided into four categories; private goods, common-pool goods, club goods and public goods.

Public goods: public goods are also called collective goods or social goods. Example here are public parks, street lights, air, etc. In addition to being non-excludable, public goods are also non-rivalrious, meaning that the use of the good by one person does not limit the use by another, hence  the free rider incentive applies.

For a better understanding, I suggest you look up the other types of goods I mentioned above.

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Answer:

Mrs.Smith should continue to operate the business in the short run but shut down in the long run.

Explanation:

According to the shut down rule, at the profit-maximizing positive level of output, a business in a competitive market should continue to operate in the short-term if the price equals to or is greater than the average variable cost, but should shut down in the long term if the price is less than or equal to total cost. Here,

price = $8.10

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Mrs.Smith should continue to operate the business in the short run but shut down in the long run.

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