14.3 Economics of Public Choice

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14.3 Economics of Public Choice CONTEMPORARY ECONOMICS 12/5/2018 14.3 Economics of Public Choice Objectives Discuss how representative democracy may favor special interests at the expense of the public interest. Distinguish between bureaus and firms, and explain why bureaus might be less responsive to customers than firms are. LESSON 14.3

14.3 Economics of Public Choice Key Terms maximizing political support rational ignorance bureaus

Representative Democracy 14.3 Economics of Public Choice Representative Democracy Maximizing political support—the objective assumed to guide the behavior of elected officials; comparable to profit maximization by firms and utility maximization by households Role of special interest Rational ignorance—A stance adopted by voters when they find that the cost of understanding and voting on a particular issue exceeds the benefit expected from doing so

14.3 Economics of Public Choice Bureaus Bureaus are government departments and agencies charged with implementing legislation and financed through legislative bodies

Bureaus Versus Firms Voluntary exchange versus coercion Product prices 14.3 Economics of Public Choice Bureaus Versus Firms Voluntary exchange versus coercion Product prices Customer feedback Voter incentives Private versus public production