Discuss the problem of clear benefits and hidden costs related to government programs. Why can it result in inefficiency?
Please provide the best answer for the statement.
Elected representatives or government officials tend to favor programs that provide immediate or clear-cut benefits and have long-term or hidden costs. This situation may result in economic inefficiency if programs are supported in those cases where the benefits are clear or certain, but they are less than the costs. Conversely, elected representatives or government officials tend to reject programs that have immediate costs, but long-term benefits. This situation may result in economic inefficiency if programs are opposed in those cases where the long-term benefits are much greater than the immediate costs.
You might also like to view...
If a producer must pay the cost of his or her pollution because property rights have been assigned, then
A) pollution will be completely eliminated. B) the supply curve will shift rightward as the new costs are added. C) the supply curve will shift leftward as the new costs are added. D) consumers will now consume more of the good because the external costs are reduced. E) there is no longer any marginal benefit from the good or service being produced.
If countries have different resource endowments, trade is usually not possible
a. True b. False
Suppose you inherit an orange orchard and it generates an annual return of $16,000 . You want to sell it. The interest rate is 8 percent. If the government imposed an interest rate ceiling at 10 percent, the ceiling would cause the price of your orchard to
a. go down b. go up c. stay the same d. be irrelevant because you would be unable to sell the orchard at any price when the price ceiling is higher than the interest rate e. not enough information given
Suppose the government imposes a 20-cent tax on the sellers of iced tea. Which of the following is not correct? The tax would
A. discourage market activity. B. reduce the equilibrium quantity. C. raise the equilibrium price by 20 cents. D. shift the supply curve upward by 20 cents.