According to public choice theorists, people behave differently in the market sector than in the public sector because
A) the more people there are in the market sector the less influence they are able to exert, whereas the more people there are in the public sector the more influence they are able to exert.
B) the fewer people there are in the market sector the less influence they are able to exert, whereas the fewer people there are in the public sector the more influence they are able to exert.
C) self-interest is the motivating force in the market sector, whereas altruism is the motivating force in the public sector.
D) altruism is the motivating force in the market sector, whereas self-interest is the motivating force in the public sector.
E) institutional arrangements are different in the two sectors.
E
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Refer to the figure above. What is the price at which the monopolist should sell its output?
A) $3 B) $4 C) $6 D) $9
John is trying to decide whether to expand his business or not. If he continues his business as it is, with no expansion, there is a 50 percent chance he will earn $100,000 and a 50 percent chance he will earn $300,000. If he does expand, there is a 30 percent chance he will earn $100,000, a 30 percent chance he will earn $300,000 and a 40 percent chance he will earn $500,000. It will cost him $150,000 to expand. To make the best decision, John should compare:
A. the expected value of his earnings if he doesn't expand with the expected value of his earnings if he does expand. B. the difference in expected earnings if he does or does not expand to the cost of expansion. C. the expected value of his earnings if he expands to the cost of expansion. D. None of these statements is true.
Suppose Scott's demand for a public good is P = 7 - 0.3Q and Mike's demand is P = 10 - 1.5Q. The equation for the total demand for the public good is:
A. P = 17 - 1.8Q. B. P = 20 - 3.0Q. C. P = 3 - 1.2Q. D. P = 14 - 0.6Q.
If the market price of a product falls and as a result total revenue of firms falls, we can conclude that
A) demand is elastic in this price range. B) the product's price is above the midpoint of its demand curve. C) demand is inelastic in this price range. D) the demand curve is horizontal.