In this situation the monopoly's profit maximizing output level is:
a. 0.2.
b. 0.4.
c. 0.5.
d. 0.7.
QUESTION 2Cost-benefit analysis is the public sector counterpart to ____ used in private, profit-oriented firms.
a. ratio analysis
b. break-even analysis
c. capital budgeting techniques
d. economic forecasting
e. none of the above
QUESTION 3The following is an example of risk aversion
a. those applying for a well-paid job tend to be the most qualified
b. more reckless drivers opt for cars with fewer safety devices
c. the contractor with the lowest bid for a is the most qualified
d. Initial Public Offerings (IPOs) seek investors when prospects look poor
QUESTION 4If the government requires a natural monopoly to price at marginal cost:
a. monopoly firms will earn zero economic profits because the price of the good equals the cost of producing that good.
b. monopoly firms will operate at a loss because P < AC.
c. more firms will be able to enter the market.
d. producer surplus will increase because quantity supplied is greater.
QUESTION 5In cost-effectiveness analysis, constant cost studies:
a. are rarely used
b. attempt to specify the output which may be achieved from a number of alternative programs, assuming all are funded at the same level
c. are useless because they fail to adequately evaluate program benefits
d. try to find the least expensive way of achieving a certain objective
e. none of the above
QUESTION 6The following is an example of risk aversion
a. those applying for a well-paid job tend to be the most qualified
b. more reckless drivers opt for cars with fewer safety devices
c. the contractor with the lowest bid for a is under-qualified
d. Initial Public Offerings (IPOs) seek investors when prospects look good
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