Distribution of benefits and costs The Assembly, the legislature of the fictional country of Manufa, is considering legislation that will generate benefits of $15 million and costs of $11 million. For perspective, Manufa's population is 60 million.
Passing the legislation is (inefficient or efficient? ), and if everyone in Manufa shares equally in both its benefits and its costs, the Assembly will vote ( against or for? ) the legislation.
If the costs of the legislation are concentrated among a few people instead of widespread among the population, those who benefit will be willing to spend up_____ to lobbying the Assembly against the legislation. (Note: Assume that the benefits are widespread; therefore, you can ignore them in the calculations of the few who experience the costs.)
a. $0 million
b $15 million
c $26 million
d $11 million
e $4 million

The legislation will be efficient because it generates a return of over thirty percent on investment(4/11). This is well above cost of capital assuming here is no hyper inflation in Manufa.

2

e) $ 4 million

Explanation:

15 million minus 11 million(15-11) yields $4 million

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