Which of the following represents why private production tends to be more efficient then government production?
What will be an ideal response?
a. Private companies face a profit motive that keeps them operating efficiently, government bureaucracies use taxpayer money and, therefore, do not face this profit motive.
c. Politicians have a strong incentive to support projects that have immediate and easily recognized benefits and distant and unidentifiable costs, even if the total costs outweigh the total benefits.
d. Politicians have a strong incentive to support programs where the benefits are highly concentrated on special interest groups and the costs are widely dispersed among voters, even if the total costs outweigh the benefits.
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Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the purchase. What value does Arthur place on his cell phone?
A) $0 B) $150 C) $225 D) $300
A third party is a person, or persons, who:
a. consume goods produced from at least two intermediate inputs. b. avoids the transactions of the two principal parties. c. takes risks to avoid externalities. d. internalizes the costs of market failure. e. is imposed upon by the activity of others.