Question 1.
One result of the public choice model is that most economists believe that
• when market failure occurs, government intervention will always lead to a more efficient outcome.
• government intervention will always result in a reduction in economic efficiency in regulated markets.
• policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency.
• the voting paradox will prevent voters from selecting the best person for public office.
Question 2.
The public choice model raises questions about the government's ability to regulate economic activity efficiently. Which of the following statements represents the views of most economists with regard to the role of government?
• Congress should abolish the Food and Drug Administration, the Environmental Protection Agency, and other agencies and commissions because the costs of their actions exceed the benefits they provide to the public.
• Government should do more to regulate markets. The public choice model has shown that rent seeking and rational ignorance affect more markets than are currently subject to regulation.
• U.S. citizens can afford more government regulation if the cost of this regulation is borne mostly by taxpayers with the highest incomes.
• Agencies such as the Food and Drug Administration and the Environmental Protection Agency can serve a useful purpose, but we need to take the costs of regulation into account along with the benefits.
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