ECO 1 Lecture Notes - Lecture 18: Median Voter Theorem, Laffer Curve

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Public choice model: a model that applies economic analysis to government decision making and can provide insight into the government"s decisions. Voting paradox-failure of majority voting to always result in consistent choices. Median voter theorem- a majority vote is likely to represent the preferences of the voter who is in the political middle. Arrow"s impossibility theorem: a theorem that states there can be no system of voting devised that will consistently represent the underlying preferences of voters. Voting market: as presented by elections is not as efficient as consumer producers in markets for goods and services. Government failure: governments can also fail in creating maximum surplus for society, governments can also fail in this. Rent seeking- the practice of using government actions by individuals or firms to try to better themselves at the expense of others. Example: u. s. sugar firms have successfully lobbied the government for a quota on sugar imports, which keeps the price of their product high.

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