The Voting Paradox Suggests That the "Voting Market," as Represented

question 132

Multiple Choice

The voting paradox suggests that the "voting market," as represented by elections

• A) lead to a superior outcome in representing consumer preferences compared to the private market for goods and services.
• B) may often lead to an inefficient outcome in representing consumer preferences compared to the private market for goods and services.
• C) is no different from the private market for goods and services in terms of representing consumer preferences.
• D) may not lead to an efficient outcome but certainly leads to a more equitable outcome in terms of distributing goods and services.

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Definitions:

Positive Feedback

Put simply, success breeds success, failure breeds failure; the effect is seen with goods that are subject to network externalities.

Marginal Social Benefits

The additional benefits to society as a whole from producing one more unit of a good or service.

Socially Optimal Level

The level of output or activity where the benefits to society are maximized, taking into account both private and external costs and benefits.

Marginal Private Benefits

The additional satisfaction or utility gained by a consumer or firm from consuming or producing one more unit of a good.