The Median Voter Theorem States That the Outcome of a Majority

question 186

Multiple Choice

The median voter theorem states that the outcome of a majority vote

• A)tends to favor the preferences of high-income individuals and ignore the median voter.
• B)is likely to represent the preferences of society's middle-income voter.
• C)is likely to represent the preferences of the voter who is in the political middle.
• D)is determined by the average consumer and producer in an economy.

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Definitions:

Paradox of Voting

The concept that for a rational, self-interested voter, the costs of voting will normally exceed the expected benefits, given the low probability that one vote will influence the outcome.

Majority Voting

A voting system in which decisions are made based on the majority of votes received, often used in elections and organizational decision-making processes.

Principal-Agent Problem

A scenario in which conflicts of interest arise because the goals of a principal (e.g., a shareholder) do not align with those of an agent (e.g., a company executive).

Moral Hazard Problem

The possibility that individuals or institutions will behave more recklessly after they obtain insurance or similar contracts that shift the financial burden of bad outcomes onto others. Example: A bank whose deposits are insured against losses may make riskier loans and investments.