According to Economic Theory, It Is Often Rational for a Politician

question 171

Multiple Choice

According to economic theory, it is often rational for a politician to support special interest groups at the expense of unorganized, widely dispersed groups (for example, taxpayers or consumers)

• A) only when the gains that accrue to the special interest group exceed the costs imposed on other voters.
• B) when nonspecial-interest voters are unconcerned or uninformed about the issue, and campaign funds are readily available from the special interest group.
• C) only if the government action is socially efficient.
• D) only if the government action will reduce the monopoly power of business or labor and, thereby, lead to an improvement in the general welfare of consumers.

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Definitions:

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Equilibrium Price

The pricing level where goods supplied and goods demanded by consumers are equal.

Government Interference

Actions by a government that affect the market, potentially through regulations, taxes, subsidies, or direct control of industries.

Marginal Cost

Marginal cost is the cost incurred by producing one additional unit of a product or service, often considered for decision-making regarding production levels.