Question

When do we expect special-interest groups to form?

		when the choices made by the government match the preferences of most voters
		when a policy will affect a large number of people
		when the costs of a project are spread out among all taxpayers while the benefits are concentrated among smaller segments of the population
		when there is a great possibility that a vast number of citizens will become free-riders

Answer 1

When do we expect special-interest groups to form?

Correct answer:

when the costs of a project are spread out among all taxpayers while the benefits are concentrated among smaller segments of the population

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Explanation:

There are many public goods where this problem is visible. The special interest groups are formed so that the benefits of a project reach all segments of the population.

It is quite unlikely that the choices made by the government will match the preferences of most voters. Further, every policy is likely to affect a large number of people. Thus, special interest groups are necessary to represent the population. However, they do face the problem of free-riding: everyone wants a solution, but no one wants to exert any effort.