Question

Which of the following is FALSE about public-sector decision making? Decisions are based on majority rule. Incentives play a role in decision making. Decisions involve no opportunity cost. The price charged to consumers is often less than its full opportunity cost.

Answer 1

Answer:

Decisions involve no opportunity cost.  

This is the FALSE statement about public- sector decision making.

Explanation:

Option a is clearly true because decisions are always taken on the basis of opinion of majority.

Option B  is also true because incentives play an important role in decision making.

Option D is also true because prices are charged in a way that keeps prices less than opportunity cost.

Answer 2

Answer:

The correct answer is letter "C": Decisions involve no opportunity cost.

Explanation:

Opportunity cost represents the return of an option taken compared to the benefit of the option forgone. It is also understood as the returns of the next best available option. Opportunity costs are used both in the private and public sectors of the economy.  

Every organization cannot make a decision without analyzing the benefit-cost of a choice. The public sector, that emphasizes its decisions in the common well-being, must use opportunity costs to maximize the benefits for individuals while reducing the costs for the central government.