A few simple economics questions concerning efficiency.?

Question

Competitive markets will generally .

1. produce too much of a public good

2. produce the efficient amount of a public good in the short run but not in the long run

3. produce the efficient amount of a public good

4.produce too little of a public good

I think it's 3, but if you consider emergency situations, it could be 2.

# Using the "It's not fair if the result isn't fair" principle of fairness, an income tax designed to transfer wealth from the rich to the poor .

1. increases efficiency and does not affect equity

2. decreases efficiency and increases equity

3. increases efficiency and equity

4. decreases efficiency and equity

decreases decreases?

Answer 1

produce too little of a public good.  Public goods are the ones where it's impossible to exclude someone who doesn't pay.  Because of this, too few people will pay, and the firm will not produce as much as desirable

decreases efficiency -- rich people won't work as much -- and increases equity -- gives the poor more money