Many economists believe that a nationalized firm tends to be inefficient because
a. it sets P = MC
b. it makes economic profits
c. tax revenues cannot be used to subsidize the firm
d. managers have strong incentives to excel
e. the government cannot go bankrupt
E
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Do competitive markets use resources efficiently? Explain why or why not
What will be an ideal response?
A firm has the choice of offering "dirty" jobs that are likely to cause severe health problems for its workers or of offering "clean" jobs by installing safety equipment at a cost of $5 per hour per employee that will substantially reduce the chances of health problems. The firm will
A. install the safety equipment if workers can ascertain whether they are working a dirty or a clean job. B. never willingly choose to install the costly safety equipment. C. willingly install the safety equipment if workers are willing to be paid $7 per hour less in a clean job than in a dirty job. D. install the safety equipment if workers are willing to be paid $3 per hour less in a clean job than in a dirty job. E. never install the safety equipment without a government subsidy to do so.