Because majority voting fails to incorporate the strength of the preferences of individual voters, it:
A. creates negative externalities.
B. under some circumstances produces economically inefficient outcomes.
C. leads to market failure.
D. leads to politics dominated by special interest groups.
Answer: B
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Ashton has the utility of wealth curve shown in the above figure. Ashton owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year
If he does have an accident, his car is worthless. Suppose all sports cars owners are like Ashton. An insurance company agrees to pay each person who has an accident the full value of their car. The company's operating expenses are $1,000. What is the minimum insurance premium that the company is willing to accept? A) $3,000 per year B) $6,000 per year C) $10,000 per year D) $15,000 per year
A monopolist might keep the prices below the profit maximizing level:
a. to attract new firms to the market. b. to increase producer surplus. c. due to government intervention and scrutiny. d. due to economies of scale.