The special-interest groups model of government:
A. is most applicable when benefits apply to few people but costs apply to many people.
B. suggests that governments often have incentives to produce inefficient outcomes.
C. is based on the idea that small groups manipulate the government.
D. All of these are correct.
Answer: D
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A polluted river has 20 homes on it that rent for $1,000 each per month. Homes on a similar river that is not polluted rent for $2,000 each per month
The river is polluted because there are two factories on the river that dump polluted water in the river. Each factory could install a filter that would cost $5,000 each and would reduce the pollution in the water to a negligible level. The external cost in this problem is A) $20,000. B) $5,000. C) $10,000. D) $30,000.
If you bought a long contract on financial futures you hope that interest rates
A) rise. B) fall. C) are stable. D) fluctuate.
Consumption spending includes spending on:
A. stocks, bonds, and other financial instruments. B. capital goods, residential housing, and changes in inventories. C. goods and services by federal, state, and local governments. D. durables, nondurables, and services.
Which of the following are sources of revenue for state and local governments?
i. property taxes ii. sales taxes iii. transfers from the federal government A) i, ii and iii B) ii and iii C) i and ii D) i only E) i and iii