Please answer 5,6,11,13 5. What is rent-seeking? When is it likely to be widespr

Question

Please answer 5,6,11,13

5. What is rent-seeking? When is it likely to be widespread? How does it influence economic efficiency? Explain 6. The average person is more likely to make a well-informed choice when purchasing a personal computer than when voting for 3 congressional candidate. Is this statement true? Why or why not? 11 What is the shortsightedness effect? How does it influence the attractiveness of government borrowing? Explain. 13. Because government-operated firms do not have to make a profit, they can usually produce at a lower cost and charge a lower price than privately owned enterprises, Evaluate this view.

Explanation / Answer

5)

Rent seeking refers to the manipulation of public policies and condition by the firm to gain maximum profit. Here, firms do not involve themselves in productive activities, instead these firms seek to get favorable policies and actions from government by lobbying.

It is widespread where business class and political leaders have strong nexus. Political leaders make policies in favor of such business class.

It affects economic efficiency adversely. Firm does not try to maximize profit by operating at minimum level of output, instead firm tries get favorable terms and policies from government.

Hence, efficiency and productivities are severely compromised in rent seeking behavior. Ultimately, generally public welfare is influenced unfavorably.

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