If (PVB/PVC) for a Given Policy Option Equals 5

question 11

Multiple Choice

If (PVB/PVC) for a given policy option equals 5.5, this means that

• A) the policy option is not feasible
• B) for every dollar of incremental costs incurred by society, there are $5.50 in realized incremental benefits
• C) the policy option is feasible
• D) both (b) and (c) are correct

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Definitions:

Payoff Matrix

A table that describes the possible outcomes or payoffs in a strategic decision-making situation, typically used in game theory.

Dominant Strategies

In game theory, a strategy is considered dominant if, regardless of what any other players do, the strategy earns a player a larger payoff than any other.

Joint Profits

The combined profits earned by two or more firms when they cooperate on a project or merge their operations.

Tacit Price Agreement

An unspoken understanding among competitors to set prices at a certain level without explicit communication.