Question

Suppose american winemakers convince the federal government to issue a directive to serve only domestically produced wine at governement functions. This would be an example of.
a) principle agent problem
b) rent seeking behavior
c) moral hazard
d) logrolling

Answer 1

Answer:

B) rent seeking behavior

Explanation:

Rent seeking behavior refers to actions carried out by businesses that try to seek benefits through government policies. In other words, the businesses will try to make the government give them some type of special treatment or special benefit at the expense of the general population.

In this case, the American winemakers were able to convince government officials to only serve domestic wine at government events. The problem is that the general population (taxpayers) are the ones that pay for that wine. American winemakers will benefit at the expense of the taxpayers.