In the text we discussed how rent seeking is one of the costs of government intervention. Consider a group of pig farmers who are lobbying the federal government for some form of financial assistance (as they did in 1998 when the world price of pork declined steeply).
a. Explain why economists call such lobbying "rent seeking."
b. Suppose the farmers spend $500 000 in their lobbying efforts but have no effect on government policy. What is the cost to society of the rent seeking? Explain.
c. Suppose the $500 000 of lobbying does lead to a change in government policy. Now what is the social cost of the rent seeking?