Quiz 6: The Economics of Political Action

Business

It is very unlikely that voters will be well-informed on the issues and the positions of candidates because there is a zero possibility or chances of an individual vote to decide the city, state, or national election. Due to this, individual voters do not find it attractive to spend his or her time and effort in gathering information that can help him or her in making informed choices. In economics, this kind of behavior of voters is termed as a rationally ignorant behavior.

The assertion that duration of view should be the outmost criteria for holding the resource is not agreeable. More than this, sustainable and efficient usage of resources should be the criteria behind the ownership of a resource. Government ownership in most cases leads to economically inefficient outcomes and thus creates more wastage and costs than benefits. It is true that resources like forests take decades to develop but the important thing is how they are utilized in the first place if they are utilized in sustainable manner then they can rejuvenate and thus net loss would be zero but unsustainable usage can lead to high net loss. Government ownership with elements of collective ownership results in tragedy of commons or in more simplistic terms can lead to wastage or unsustainable usage of resources. Thus, to say that duration of views should be the base for allocation of resources or ownership of resources and that government with its ability to take long view should be custodian of resources such as forest is not a correct assertion.

The given statement appears to be true because it is the government that facilitates the smooth operation of businesses by maintaining the economic, political, and social environmental balance of a country. Government always formulates rules and regulations pertaining to the smooth functioning of market and amends these rules from time to time to cater the changing market environment. So, if there is problem with the market or in other words, if market is not able to produce or allocate a good efficiently then government can take steps to correct this failure and through various policy instruments and decisions can rectify the mistakes and once again put the market process back on track.

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