Why does the private market succeed in meeting consumers’ demands while majority voting in many cases fails to do the same?
Please provide the best answer for the statement.
The key failure of majority voting is the inability to incorporate the strengths of voters’ preferences. Each person only gets one vote regardless of how strongly they are for or against a certain policy. Consequently, the total preference (willingness to pay) of society may not outweigh the cost of a public venture or the total benefit exceeds the cost, but through majority voting the policy is not adopted.
The private market differs because consumers are able to obtain goods even when the majority of the population doesn’t prefer them or individual consumers can choose to not purchase a highly popular good. The market provides goods based on the strength of consumers’ preferences for certain goods and this results in an efficient outcome.
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Adverse selection in the market for health insurance arises because
A) buyers of insurance know more than insurance companies about the likelihood of an illness for which buyers want insurance. B) the federal government intervenes in insurance markets by controlling prices and reimbursement policies. C) many insurance companies care more about profits than they do about providing services for their customers in the event of illness. D) insurance companies are not allowed to charge premiums that are high enough to insure against "worst-case" illness.
As a result of legislation to establish a floor price for milk, most dairy farmers will
a. end up earning a normal rate of return in the long run b. end up earning a zero rate of return in the long run c. end up earning a negative rate of return in the long run d. benefit from the increased cost of specialized resources used in dairy farming e. suffer if they own specialized resources at the time the legislation is passed