A disadvantage of the corporate form of business organization is
A) double taxation.
B) limited access to capital.
C) that the corporation can only do business in the state where it was incorporated.
D) unlimited liability for shareholders.
A
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Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low. B) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low. C) producers should lower the price to $1 in order to sell the quantity demanded of 10,000. D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.
Suppose there are 3 voters in a legislature, and two projects are up for consideration. Project A creates benefits of 3 for district 1 but benefit of -1 in district 2 and -3 in district 3. Project B creates benefits of 3 in district 2, -1 in district 1 and -3 in district 3. a. Would either of these projects be implemented under simple majority rule voting (where each project is approved or not approved on its own)?
b. How would your answer to (a) change if the projects can be bundled? c. Is it efficient to fund these projects? d. Suppose the Coase Theorem applies to legislatures -- i.e. suppose legislators can create alternatives with cash side-payments. What might voter 3 do to prevent the outcome in (b)? e. True or False: If transactions costs are low and side-payments are allowed, only efficient projects will pass under vote trading. What will be an ideal response?