Suppose that a special interest group makes up 2 percent of the population. If a policy transfers $600 to the special interest at a cost of $100,000 to society, will the special interest group lobby for this policy?
A) Yes, the benefits of $700 outweigh the costs of $42.
B) No, the benefits of $600 are less than the costs of $2,000.
C) They'll be indifferent since the benefits equal the costs.
D) No, the benefits of $600 are less than the costs of $100,000.

Question

Quizplus · Accepted Answer

The special interest group receives $600, but the cost to society is $100,000. Since they make up 2% of the population, their share of the cost is $2,000, which is greater than the $600 benefit.

Suppose That a Special Interest Group Makes Up 2 Percent