Suppose that Kate and Kyle perceive $500 of marginal benefit from a proposed new recreation center, whereas Keith perceives $100. If the tax levied on each for the center is $400, a majority vote will:
A) pass this project and resources will be overallocated to it.
B) pass this project and resources will be efficiently allocated.
C) defeat this project and resources will be underallocated to it.
D) pass the this project and resources will be underallocated to it.
Because majority voting fails to incorporate the strength of the preferences of individual voters, it:
A) leads to market failure.
B) produces economically inefficient outcomes under some circumstances.
C) creates negative externalities.
D) leads to politics dominated by special interest groups.
According to public choice theorists, the private sector is more efficient than the public sector mainly because:
A) wages, salaries, and fringe benefits are higher in the private sector.
B) the private sector has a clear test of performance: profit and loss.
C) worker turnover is higher in the public sector.
D) of extensive negative externalities in the public sector.
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