1.)

An article describing the work of James Buchananobserved:

"Buchanan and other public choice theorists altered the debate by proposing that government may not really correct problems in the marketplace because of the wealthtrading, or rentseeking, that occurs during the legislativeprocess." The same article included the following statement byBuchanan: "I was greatly influenced by KnutWicksell's admonition that economists cease acting as if government were a benevolentdespot."

Source: Robert L.Formaini, "James M.Buchanan," Economic Insights, Federal Reserve Bank ofDallas, vol. 2 no.2, 2003.

Explain why James Buchanan and other public choice economists believed that government policymakers do not act as"benevolent despots."

A.

Public choiceeconomists, such asBuchanan, assume that policymakers are motivated by their ownself-interests.

B.

They believe that government policymakers are limited in their knowledge of the issues.

C.

It would be their belief that government policymakers are influenced unduly by the median voter.

D.

Buchanan and other public choice economists believe that policymakers are constrained by market failure.

2.)

Why would"rent seeking" be an impediment to government attempts to correct"problems in themarketplace"?

A.

Voters could act as a constraint on legislators voting forrent-seeking legislation.

B.

Policymakers may accept campaign contributions fromrent-seeking firms to introducespecial-interest legislation on their behalf.

C.

Members of Congress are not likely to vote to approve a bill in exchange for favorable votes from other members on other bills.

D.

There is no system of voting that can be devised to consistently represent the underlying preferences of the voters.