Underestimating actual costs

Reference no: EM1367778

Assume the military bureaucracy consistently misinforms Congress on total costs of producing military hardware. Suppose that it underestimates the actual costs and that the political representatives believe these estimates. How is this likely to cause the loss in efficiency? What are the efficient outputs of military hardware and outputs desired by the military bureaucracy? How will the output chosen differ from the efficient output even if Congress attempts to achieve efficiency? In your answer, assume that the military seeks to maximize the size of its budget.

Reference no: EM1367778

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