{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Assignment 4 - Public finance

Assignment 4 - Public finance - 11 The OMB’s use the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Jennifer Edwards Public Finance Prof. Dunbar November 19, 2009 2) The opportunity cost is calculated as the resource cost of producing the input and in a competitive market, the price will equal the marginal resource cost. In a monopolistic market, the price will be greater than marginal cost. The opportunity cost, and the figure used in a cost benefit calculation, should be the marginal cost. The additional price paid is a surplus to the selling firm, so it is a transfer, not a net benefit or cost.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 11) The OMB’s use the historic pretax private investment return for public investments recognizes its competition by trying to keep the rates competitive. The opportunity cost of public borrowing is private borrowing, and these rates should be similar. The cost of government borrowing may be a better measure of the discounted value of an asset, because an asset is purchased with current money and is expected to yield a stream of benefits over time....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online