Which of the Following Is the Best Example of "Rent

question 78

Multiple Choice

Which of the following is the best example of "rent seeking"?

• A)The government imposes a pollution tax on firms to eliminate a negative externality.
• B)A municipal government chooses the lowest bid for construction of a new water system.
• C)Owners of aerospace firms receive government subsidies to make the firms more competitive in world markets.
• D)Costly renovations are made to the roof of the Parliament Buildings in Ottawa.
• E)Taxpayer funds are used for snow removal on public streets.

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Definitions:

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, used to measure the profitability and efficiency of a product or service.

Margin Of Safety

The difference between the actual or expected profitability of a project and the break-even point. It is a cushion against uncertainty.

Net Operating Income

The profit generated from a company's everyday operations, calculated by subtracting operating expenses from operating income.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating the amount contributing to covering fixed costs and generating profit.