Consider the following net benefits (measured in billions of dollars) that will result from the passage of two legislative bills, X and Y:
(a) Identify the logrolling opportunity present in this situation.
(b) Identify the potential gains to voters.
(c) Explain why logrolling is efficiency enhancing.
(a) On their own, neither issue X nor Y will pass. Both will be voted down by votes of 2-1. If
person A trades a vote with B, then both issues will pass by 2-1 votes.
(b) With both issues passed, overall utility for person A is 3. For person B, overall utility is 4. For person C, overall utility is -5.
(c) With issue X passed, society is benefited because it had a total benefit to society of 3.
Logrolling also allowed issue Y to pass, though it shouldn't have since its total benefit to society is -1.
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As more of an activity is undertaken, it is reasonable to assume that
a. the total benefits will decline. b. the marginal benefits will decline. c. the fixed costs will decline. d. the marginal benefits will increase.
National output and national income are the same because
A) one seller's profit is another seller's loss. B) one seller's profit is another buyer's loss. C) the sale of goods and services generates income for the sellers. D) the sale of goods and services generates tax revenues for the government.
Sustainable development means
(a) emphasizing the role of the market. (b) emphasizing the role of government. (c) meeting the present generation's needs without compromising the needs of future generations. (d) maintaining output growth at a constant rate.
A consequence of a negative externality is that social costs __________ private costs, and the socially optimal level of output __________.
A. equal; is not equal to social costs or private costs B. do not equal; is obtained C. do not equal; is not obtained D. equal; is obtained E. equal; is not obtained