ECON 2 Lecture 31: Econ 2 - Principles of Economics 2 - 31
Document Summary
Society must decide in some way which public goods and services it wants and in what amounts, it also must determine extent to which it wants government to intervene in private markets. Inefficient voting outcome: inefficient n vote: total benefit>total cost but still voted against, inefficient yes vote: total cost>total benefit but still voted for. Inefficient voting outcome: allocation or under allocation of resources. May see over production or under production of public good and thus over- Key point: because majority voting fails to incorporate the strength of the preferences of the individual voter, it may produce economically inefficient outcomes. Interest groups: those who have a strong preference for a public good may band together and use advertisements, mailings, and direct persuasion to convince others of the merits of that public good. Political logrolling: the trading of votes to secure favourable outcomes can also turn an inefficient outcome into an efficient one.
