Which of the Following Programs Would NOT Be Favored by Economists

question 101

Multiple Choice

Which of the following programs would NOT be favored by economists Hart, Shleifer, and Vishny (HSV) and why?

• A) Public prisons replace private prisons because tight budget constraints reduce the incentive to increase quality.
• B) Public prisons replace private prisons because the profit motive increases the incentive to increase quality.
• C) Private prisons replace public prisons because the profit motive encourages cost-cutting at the expense of quality.
• D) Private prisons replace pubic prisons because slack budget constraints increase the incentive to increase quality.

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Definitions:

Consumption

The process of using goods and services to satisfy wants or needs.

Revealed Preferences

An economic theory that infers preferences of consumers by observing choices made under budget constraints, instead of through direct inquiry of preferences.

Francs

Currency units formerly used in France and currently used in some countries of the Francophone world, including Switzerland and some African countries.

Consumption

The use of goods and services by households, contributing to their satisfaction and utility.