Special interest group Q receives a 1/10,000?? slice of the economic pie. Its net benefit from either an economic growth policy or a transfer policy is $50,000. In order for group Q to be indifferent between the two policies,the economic growth policy would have to make the size of the economic pie (Real GDP)grow by _________________. This type of analysis is used to show that special interest groups tend press government for ______________ instead of ________________.

Question

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If group Q receives a 1/10,000 slice of the economic pie and its net benefit from either policy is $50,000, then the size of the economic pie would need to be $500,000,000 ($50,000,000 divided by 1/10,000) in order for group Q to be indifferent between the two policies.

This type of analysis is used to show that special interest groups tend to press government for transfers (policies that take from one group and give to another) instead of economic growth policies, as the potential gain from transfers may be larger for the small group, even if it comes at the expense of overall economic growth and efficiency.

Special Interest Group Q Receives a 1/10,000?? Slice of the Economic