Author Question: The figure above shows the marginal benefit curve (MB) and marginal cost curve (MC) of surveillance ... (Read 38 times)

awywial · **on:** May 24, 2019

The figure above shows the marginal benefit curve (MB) and marginal cost curve (MC) of surveillance satellites that provide national defense services.

Using the figure above, suppose there are two political parties, the Hawks and the Doves, which agree on all issues except for the quantity of defense satellites. The Hawks want 300 satellites and the Doves want 100 satellites. The voters are well informed and know what is best for them. The parties run a voter survey and discover the marginal benefit curve (MB). They also know the marginal cost curve (MC). What quantity of satellites will most likely result from this political process?
◦ 200, because unless each party proposes 200 satellites, the other party can beat it in an election
◦ 300, because the Hawks are more likely to win
◦ 100, because the Doves are more likely to win
◦ 200, because the parties will strike a deal: each will agree to give up 100 satellites
◦ Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided.

amandalm · **Reply #1 on:** May 24, 2019

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