If each voter pays taxes in proportion to her demand,then _____.
A)the median voter's most preferred outcome will definitely occur
B)the condition for economic efficiency is satisfied
C)special interests will have no power
D)political institutions are optimal

Question

Quizplus · Accepted Answer

If each voter pays taxes in proportion to their demand, then the condition for economic efficiency, i.e., that resources are allocated to their most valuable use, will be satisfied. This is because individuals would only demand public goods and services that provide them with benefits greater than or equal to the cost of their provision. As a result, resources would be allocated to the provision of public goods up to the point where the marginal cost equals the sum of the individual marginal benefits. This would lead to an efficient allocation of resources. It is, however, not necessarily the case that the median voter's most preferred outcome will occur or that special interests will have no power, as these outcomes would depend on the specific preferences of the voters and the institutions in place.

If Each Voter Pays Taxes in Proportion to Her Demand,then