What is a possible consequence of rent-seeking behavior?

Rent-seeking behavior refers to activities aimed at increasing one's share of existing wealth without creating new wealth. This often involves lobbying for favorable regulations, subsidies, or monopolistic practices that benefit a particular group or industry at the expense of broader economic efficiency.

The consequence of this behavior is that it tends to distort resource allocation, favoring those with power and influence. When powerful interests engage in rent-seeking, they may secure government support that grants them privileges, such as monopolies or sanctions against competitors. This leads to a misallocation of resources where capital and labor are devoted to maintaining these advantages rather than creating new products, innovations, or jobs that benefit society as a whole.

In contrast, choices that imply increased efficiency in markets or higher economic gains for society overlook the inefficiencies and inequalities created by rent-seeking behavior. Additionally, while lowering taxation might benefit businesses, it does not inherently address the negative consequences of rent-seeking that skew resource allocation. Thus, the focus on powerful interests in the correct answer accurately captures the essence of rent-seeking behavior and its impacts on the economy.