In deciding between using a public bureau or a private firm to collect garbage, elected officials may prefer a public bureau because
a. public bureaus have been shown to be more efficient than private firms in garbage collection
b. they can convey political favors by giving people jobs in the public bureau
c. public bureaus will be more responsive to consumers
d. citizens would have to pay if private firms collected garbage
e. taxes will be lower if the public bureau is in charge of garbage collection
QUESTION 2In the game theory model of oligopoly,
a. firms will be successful in colluding to raise prices
b. one firm raises its prices, and other firms follow suit
c. firms will match other firms' price cuts but not their price increases
d. firms may attempt to avoid the worst outcome but may achieve a less-than-optimal outcome
e. firms never avoid the worst outcome
QUESTION 3A government that uses a bureau rather than a private firm to provide some good or service
a. may have less opportunity for officials and legislators to reward friends and supporters with jobs
b. will always incur higher costs of production
c. will lose the ability to make decisions via the hierarchy of the market
d. may be better able to control details of production
e. will not be able to sell the good or service after it is produced
QUESTION 4A payoff matrix is a table listing the expected economic profit resulting from different possible strategies.
a. True
b. False
QUESTION 5Because of the free-rider problem, it is necessary that public bureaus manufacture defense weapons.
a. True
b. False
QUESTION 6Price wars occur more often in monopolistic competition than in other market structures.
a. True
b. False
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