Chapter 16 Micro
Special-interest legislation usually
has concentrated benefits but widespread costs
The basic difference between a public bureau and a market firm is that the bureau
has no incentive to minimize costs
In a direct, majority-rule vote,
only the median voter is completely satisfied
Legislation that provides a price support for dairy farmers is an example of
special-interest legislation
The purpose of a political action committee is
to help elect officials sympathetic to its members' special interests
According to the textbook, public choice theory suggests that political candidates try to get elected by
appealing to the median voter
A tax on productive activity tends to
decrease formal market activity because it lowers the return on such activity
Generally, people are more satisfied with private market outcomes than with public voting outcomes because
each consumer in the private market can choose the quantity he or she desires
Rational ignorance suggests that voters may not spend much time examining candidates before an election because
each voter has virtually no chance of deciding the election
Tax evasion differs from tax avoidance in the sense that evasion
is illegal
According to rent-seeking theory, which group is most likely to benefit from representative democracy?
lawyers
One consequence of raising tax rates is that it
leads to more underreporting of income
Special-interest groups have little incentive to
make the economy more efficient
Rationality implies that in order to get what they want, people will spend the most time and effort
making private market decisions
The term underground economy refers to
market activity not reported to the government
According to William Niskanen, bureaucrats seek to
maximize budgets
Legislators often have difficulty passing legislation with widespread benefits, but that imposes concentrated costs because those who bear the costs will __________ the legislation, while those who would reap the benefits will __________ the legislation.
protest; not actively support
In deciding between using a public bureau or a private firm to collect garbage, elected officials may prefer a public bureau because
they can convey political favors by giving people jobs in the public bureau
The efficient level of public good provision is determined
where the market demand curve intersects the marginal cost curve
The median-voter model attempts to explain
why, in a democracy, the preferences of the typical voter often will dominate other choices