Using the Figure Above,suppose There Are Two Political Parties,the Hawks

question 148

Multiple Choice

Using the figure above,suppose there are two political parties,the Hawks and the Doves,which agree on all issues except for the quantity of defense satellites.The Hawks want 300 satellites and the Doves want 100 satellites.The voters are well informed and know what is best for them.The parties run a voter survey and discover the marginal benefit curve (MB) .They also know the marginal cost curve (MC) .What quantity of satellites will most likely result from this political process?

• A) 200, because unless each party proposes 200 satellites, the other party can beat it in an election
• B) 300, because the Hawks are more likely to win
• C) 100, because the Doves are more likely to win
• D) 200, because the parties will strike a deal: each will agree to give up 100 satellites
• E) Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided.

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Definitions:

State Ownership

Refers to the government control or ownership of businesses or assets.

Corporations

Legal entities that are separate from their owners, capable of owning property, entering contracts, and being held liable, often formed to conduct business.

Accrues

To accumulate or receive benefits or penalties over time, often relating to finance or benefits.

Oligopoly

A market structure characterized by a small number of firms controlling a large majority of the market share and often engaging in strategic interactions.