Suppose That the Government Is Trying to Decide Between Allocating

question 22

Multiple Choice

Suppose that the government is trying to decide between allocating its resources to build more dams or to build more freeways. In terms of forgone dams, as more freeways ________are constructed, the marginal benefit of additional freeways and the marginal cost of additional freeways________

• A) increases; increases
• B) decreases; decreases
• C) increases; decreases
• D) decreases; increases

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Definitions:

Liquidation Proceeding

A legal process in which a business closes down and its assets are distributed to claimants.

Chapter 7

A provision of the US Bankruptcy Code that involves the liquidation of a debtor's assets to pay off creditors.

Assignment

The transition of rights, possessions, or obligations between parties.

Pro Rata

A portion or share of something that is distributed or allocated in equal proportion to the whole.