The Relationship Between the Public and the Government Can Be

question 27

Multiple Choice

The relationship between the public and the government can be viewed as a special kind of ____________________,because the president works for all the people because they have hired him or her through their ballots and can fire the president at the next election.

• A) collective-action problem
• B) coordination problem
• C) Prisoner's Dilemma
• D) unstable coalition
• E) principal-agent problem

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Definitions:

External Benefit

A positive effect or advantage that results from a product or service's use, affecting individuals or entities who are not directly involved in the transaction.

Positive Externality

A beneficial effect experienced by a third party or the society as a whole, resulting from an economic transaction.

Market

The environment in which buyers and sellers interact to exchange goods, services, and information, setting prices through supply and demand.

Socially Optimal Quantity

Socially Optimal Quantity is the level of production or consumption of a good or service that results in the maximum possible economic efficiency and welfare, taking into account all social costs and benefits.