What are the public choice theory arguments against government involvement in the economy?
Public choice theory emphasizes the possibility of government failure (government attempting to do good but instead manages to make matters worse). Government failure may stem from majority rule that does not rely on benefit-cost analysis, special-interest groups capturing most of the benefits, rational voter ignorance, inefficient bureaucratic behavior, and shortsighted political behavior.
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Suppose the production of mp3 players can be represented by the following production function: q = L0.4K0.4. The firm currently produces q1 units. If all inputs doubled, the new level of output will equal
A) 20.4 q1. B) 20.8 q1. C) 0.8 q1. D) 1.6 q1.
Profit maximization is
a. the only motive of any firm's management. b. a behavioral assumption to simplify analysis. c. the same as satisficing. d. a literal description of a firm's behavior.