Under what conditions will the political process provide an inefficient amount of a public good?
What will be an ideal response?
The government will provide an inefficient amount of a public good when voters are rationally ignorant of the marginal social benefits and marginal social costs of the good. In this case, bureaucrats, intent on maximizing the size of their budgets, will provide an inefficiently large quantity of the good.
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Kaitlyn and Larissa have formed a dog bathing and grooming business business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. The opportunity cost of grooming the sixth dog in a day is bathing ________ dog(s)
A) 0 B) 5 C) 6 D) 7
Firms in perfectly competitive markets who wish to maximize profits ought to produce:
A. where marginal revenue equals market price. B. as many units as their scale allows. C. at capacity and plan to expand in the long run. D. where total profit is the greatest.