Question

The Senate, the legislature of the fictional country of Romange, is considering legislation that will generate benefits of $30 million and costs of $34 million. For perspective, Romange's population is 50 million. Passing the legislation is _____________ , and if everyone in Romange shared equally in both its benefits and its costs, the Senate will vote ____________ the legislation. If the costs of the legislation are concentrated among a few people instead of widespread among the population, those people will be willing to spend up to ___________ lobbying the Senate against the legislation. (Note: Assume that the benefits are widespread; therefore, you can ignore them in the calculations of the few who experience the costs.) The more widely spread are the benefits of the legislation, the _____________is the likelihood of lobbying for the legislation by those who will incur its benefits.
Suppose that, as before, the costs of the legislation are concentrated among a small group, but the benefits of the legislation are concentrated among another small group, and the Senate is responsive to lobbying. The people who will benefit from the legislation will be willing to spend on lobbying up to______________ , in which case the Senate will likely vote ___________ the legislation.

Answer 1

Answer:

Passing the legislation is INEFFICIENT, and if everyone in Romange shared equally in both its benefits and its costs, the Senate will vote AGAINST the legislation.

• Costs are higher than benefits, so it should be rejected.

If the costs of the legislation are concentrated among a few people instead of widespread among the population, those people will be willing to spend up to 34 MILLION lobbying the Senate against the legislation.

The more widely spread are the benefits of the legislation, the LOWER is the likelihood of lobbying for the legislation by those who will incur its benefits.

• Sadly, when public goods tend to benefit everyone equally, people do not pay attention to them. One sad example, is the current state of the country's road system which is probably the worst among developed nations. Since everyone benefits form roads, everyone complains, but the vast majority of the people do not do anything but complain to themselves or their families when travelling. This is something that has been going on for decades now, and really very few people care. Even public health care, which is one of the most basic duties of a government is something that only a few really pay attention to. Only in Switzerland (which subsidizes and deducts all health spending), does a similar system works. In no other developed, or even in most developing nations would their citizens even consider not having 100% public health care.