Anthony Downs, in The Economic Theory of Democracy, argues that voters choose to remain "rationally ignorant" when they vote in elections, knowing relatively little about the candidates or the issues. What economic principle would you invoke to explain this behavior?
a. public good theory
b. moral hazard
c. the cost of information
d. risk aversion
c
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A marginal benefit curve shows
A) the efficient use of resources. B) the quantity of one good that must be forgone to get more of another good. C) the quantity of one good that people are willing to forgo to get another unit of another good. D) there are increasing opportunity costs.
Refer to the accompanying figure. Suppose all the sellers in this market started out charging a price of $45 per unit. What is the most likely result?
A. They would lower their prices because at $45 there would be excess demand. B. They would all make a large profit because $45 is more than the equilibrium price. C. They would lower their prices because at $45 there would be excess supply. D. They would all just break even because $45 is their reservation price.
Which one of the following is TRUE in an open economy with a government sector?
A. The equilibrium level of real GDP occurs when total planned real expenditures equal real GDP. B. The equilibrium level of real GDP occurs when planned real investment spending is zero. C. The equilibrium level of real GDP occurs when real net export spending equals zero. D. The equilibrium level of real GDP occurs when planned real saving equals government spending.
?The above figure graphs the price of a bushel of wheat and housing starts. The graph shows the variables are
a. not related
b. related via an indirect relationship.
c. strongly positively related.
d. strongly negatively related.