Question

1A contest is a good way to allocate scarce resources when

A) The efforts of the players are hard to monitor directly

B) The lines of responsibility are clear

C) The decision being made affects a large number of people

D) There is no effective way to distinguish among potential users

2

American Idol is a popular television program where contestants compete to win a

$1 million record deal. To determine the winner, fans either dial the number or

send a text message indicating their favorite contestant. The contestant with the

highest number of texts and phone calls wins. What is the scarce resource in this

example?

A) $1 million record deal

B) Television ratings

C) Phone calls and text messages

D) Fans

Answer 1

1. A contest is a good way to allocate scarce resources when

A) The efforts of the players are hard to monitor directly.

Because so many people are competing for $1 million, the scarce resource is

A)$1 million record deal.