31 32 QUESTION 15 Rational ignorance occurs when: O a legislation generates larg

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31 32 QUESTION 15 Rational ignorance occurs when: O a legislation generates large benefits for a few people but imposes costs on many people. o b the preferences of the median voter dominate public choices e c voters find the cost of understanding a specific issue greater than the expected benefit from doing so. o d people make public decisions based on emotions rather than rational analyses. O e individuals or firms attempt to obtain favorable treatment from government officials. QUESTION 16 Special-interest legislation that imposes costs over many taxpayers can be enacted because: O a this legislation involves widespread benefits O b buteaus typically rely on taxes for part of their revenue O C taxpayers remain rationally ignorant of the legislation O d associated taxes are actually borne by a minority of taxpayers. especial-interest groups are drivea by an incentive to produce output at the lowest cost per unit GUESTION 37 Markets tend to underproduce goods that generate positive externalities True False Private firms and pablic bureaus diffet in that e Anas are usually financed by gotemment appropriations wiile bureaus cover their costs if enough people buy t ndows

Explanation / Answer

15. Rational ignorance occurs voters find the cost of understanding a specific issue greater than the expected benefit from doing so.This is by definition of Rational ignorance.

16. Special interest legislation that imposes costs over many taxpayers can be enacted as because special interest groups arev driven by an incentive to produce output at the lowest cost per unit.

17. Markets tend to underproduce goods that generate positive externality .[TRUE] . Because when the good generates positivev externality then then social welfare outcome is where [MSB = MC] but when individual firm do it [then it equate MB=MC] and so that markets tend to under produce goods that generate positive externality.

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