Question 1

Explain the special-interest effect.

Accepted Answer

The special-interest effect is any polit

Question 2

"Vote for my special local project and I will vote for yours." This political technique

Accepted Answer

A)  illustrates the paradox of voting. 
B)  is called "logrolling." 
C)  illustrates the median voter model. 
D)  undermines the beneﬁts-received principle. 
A)  illustrates the paradox of voting. 
B)  is called "logrolling." 
C)  illustrates the median voter model. 
D)  undermines the beneﬁts-received principle.

Question 3

What are the two characteristics that differentiate private goods from public goods?

Accepted Answer

A)  rivalry and excludability 
B)  negative externality and positive externality 
C)  marginal cost and marginal beneﬁt 
D)  ownership and usage 
A)  rivalry and excludability 
B)  negative externality and positive externality 
C)  marginal cost and marginal beneﬁt 
D)  ownership and usage

Question 4

A government is considering undertaking a construction project of an increasing scale (ranging from 1, 2, 3, to 4). The estimated marginal costs and marginal bene?ts of each successive scale of the project are given in the
Table below.
$$\begin{array} { | c | c | c | } 
\hline \text { Project } & \begin{array} { c } 
\text { Marginal Cost } \
\text { (in millions) }
\end{array} & \begin{array} { c } 
\text { Marginal Benefit } \
\text { (in millions) }
\end{array} \
\hline 1 & \$ 8 & \$ 11 \
\hline 2 & 11 & 13 \
\hline 3 & 18 & 17 \
\hline 4 & 28 & 23 \
\hline
\end{array}$$ What is the total amount that the government should spend on the construction project to attain maximum net
Bene?ts for the society?

Accepted Answer

A)  $8 million 
B)  $14 million 
C)  $19 million 
D)  $37 million 
A)  $8 million 
B)  $14 million 
C)  $19 million 
D)  $37 million

Question 5

The free-rider problem makes a good highly proﬁtable for a private ﬁrm to provide.

Accepted Answer

A) True 
 B)False

Question 6

"Government failure" is a prominent topic in

Accepted Answer

A)  public choice theory. 
B)  Keynesian economics. 
C)  socialist theory. 
D)  behavioral economics. 
A)  public choice theory. 
B)  Keynesian economics. 
C)  socialist theory. 
D)  behavioral economics.

Question 7

Suppose that Steve and Susie each perceive $200 of marginal beneﬁt from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

Accepted Answer

A)  defeat this project and resources will be underallocated to it. 
B)  defeat this project and resources will be eﬃciently allocated. 
C)  pass this project and resources will be underallocated to it. 
D)  pass this project and resources will be overallocated to it. 
A)  defeat this project and resources will be underallocated to it. 
B)  defeat this project and resources will be eﬃciently allocated. 
C)  pass this project and resources will be underallocated to it. 
D)  pass this project and resources will be overallocated to it.

Question 8

The so-called pork-barrel politics refers to congressional members

Accepted Answer

A)  trading votes with one another. 
B)  receiving perks and freebies from businesses trying to sway their votes. 
C)  paying little attention to the vocal special-interest groups. 
D)  inserting provisions for local narrow projects into comprehensive legislation. 
A)  trading votes with one another. 
B)  receiving perks and freebies from businesses trying to sway their votes. 
C)  paying little attention to the vocal special-interest groups. 
D)  inserting provisions for local narrow projects into comprehensive legislation.

Question 9

"Earmarks" refer to

Accepted Answer

A)  the additional votes that must be taken when a voting paradox occurs. 
B)  taxes that redistribute wealth or income from one income group to another. 
C)  authorized expenditures beneﬁting a narrow, speciﬁcally designated group that are included in more comprehensive spending legislation. 
D)  legislation focused on correcting negative externalities. 
A)  the additional votes that must be taken when a voting paradox occurs. 
B)  taxes that redistribute wealth or income from one income group to another. 
C)  authorized expenditures beneﬁting a narrow, speciﬁcally designated group that are included in more comprehensive spending legislation. 
D)  legislation focused on correcting negative externalities.

Question 10

Unlike a private good, a public good

Accepted Answer

A)  has no opportunity costs. 
B)  has beneﬁts available to all, including nonpayers. 
C)  produces no positive or negative externalities. 
D)  is characterized by rivalry and excludability. 
A)  has no opportunity costs. 
B)  has beneﬁts available to all, including nonpayers. 
C)  produces no positive or negative externalities. 
D)  is characterized by rivalry and excludability.

Question 11

When voters have different opinions about an issue, the position that is most likely to be adopted is that of the

Accepted Answer

A)  lobbyist. 
B)  logroller. 
C)  rent seeker. 
D)  median voter. 
A)  lobbyist. 
B)  logroller. 
C)  rent seeker. 
D)  median voter.

Question 12

According to some economists, the private sector is more eﬃcient than the public sector mainly because

Accepted Answer

A)  the private sector has a clear test of performance: proﬁt and loss. 
B)  wages, salaries, and fringe beneﬁts are higher in the private sector. 
C)  worker turnover is higher in the public sector. 
D)  of extensive negative externalities in the public sector. 
A)  the private sector has a clear test of performance: proﬁt and loss. 
B)  wages, salaries, and fringe beneﬁts are higher in the private sector. 
C)  worker turnover is higher in the public sector. 
D)  of extensive negative externalities in the public sector.

Question 13

Why are the public sector and private sector "imperfect institutions"?

Accepted Answer

The view of a benevolent government that

Question 14

People enjoy outdoor holiday lighting displays and would be willing to pay to see them, but can't be made to pay. Because most people who put up lights are unable to charge others to view them, they don't put up as
Many lights as people would like. This is an example of a

Accepted Answer

A)  negative externality. 
B)  supply-side market failure. 
C)  demand-side market failure. 
D)  government failure. 
A)  negative externality. 
B)  supply-side market failure. 
C)  demand-side market failure. 
D)  government failure.

Question 15

Which of the following statements concerning a public good is false?

Accepted Answer

A)  It is impossible to exclude nontaxpayers from the enjoyment of the public good. 
B)  All beneﬁts associated with the production and use of a public good are received by the government. 
C)  The availability of a public good to one person simultaneously makes it available to all members of society. 
D)  The private sector does not have an economic incentive to produce a socially optimal amount of a public good. 
A)  It is impossible to exclude nontaxpayers from the enjoyment of the public good. 
B)  All beneﬁts associated with the production and use of a public good are received by the government. 
C)  The availability of a public good to one person simultaneously makes it available to all members of society. 
D)  The private sector does not have an economic incentive to produce a socially optimal amount of a public good.

Question 16

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. This situation illustrates the voting inconsistency where a majority of voters prefer
The

Accepted Answer

A)  stadium over the park, the park over the jail, and the jail over the stadium. 
B)  park and jail over the stadium, and the jail over the park. 
C)  stadium over the jail, the jail over the park, and the park over the stadium. 
D)  stadium and jail over the park, and the park over the jail. 
A)  stadium over the park, the park over the jail, and the jail over the stadium. 
B)  park and jail over the stadium, and the jail over the park. 
C)  stadium over the jail, the jail over the park, and the park over the stadium. 
D)  stadium and jail over the park, and the park over the jail.

Question 17

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,

Accepted Answer

A)  a majority of the voters would favor the jail, 3 to 0. 
B)  a majority of the voters would favor the park, 3 to 0. 
C)  a majority of the voters would favor the jail, 2 to 1. 
D)  a majority of the voters would favor the park, 2 to 1. 
A)  a majority of the voters would favor the jail, 3 to 0. 
B)  a majority of the voters would favor the park, 3 to 0. 
C)  a majority of the voters would favor the jail, 2 to 1. 
D)  a majority of the voters would favor the park, 2 to 1.

Question 18

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the

Accepted Answer

A)  paradox of voting. 
B)  median-voter model. 
C)  law of diminishing marginal utility. 
D)  ability-to-pay principle. 
A)  paradox of voting. 
B)  median-voter model. 
C)  law of diminishing marginal utility. 
D)  ability-to-pay principle.

Question 19

Refer to the graphs which show demand curves reﬂecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. The collective willingness to pay for the ﬁrst unit of this public good is

Accepted Answer

A)  $18. 
B)  $14. 
C)  $10. 
D)  $6. 
A)  $18. 
B)  $14. 
C)  $10. 
D)  $6.

Question 20

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

Accepted Answer

A)  median-voter trading. 
B)  the special-interest effect. 
C)  political logrolling. 
D)  the paradox of voting. 
A)  median-voter trading. 
B)  the special-interest effect. 
C)  political logrolling. 
D)  the paradox of voting.

Explain the special-interest effect.

"Vote for my special local project and I will vote for yours." This political technique

What are the two characteristics that differentiate private goods from public goods?

The free-rider problem makes a good highly proﬁtable for a private ﬁrm to provide.

"Government failure" is a prominent topic in

Suppose that Steve and Susie each perceive $200 of marginal beneﬁt from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

The so-called pork-barrel politics refers to congressional members

"Earmarks" refer to

Unlike a private good, a public good

When voters have different opinions about an issue, the position that is most likely to be adopted is that of the

According to some economists, the private sector is more eﬃcient than the public sector mainly because

Why are the public sector and private sector "imperfect institutions"?

People enjoy outdoor holiday lighting displays and would be willing to pay to see them, but can't be made to pay. Because most people who put up lights are unable to charge others to view them, they don't put up as Many lights as people would like. This is an example of a

Which of the following statements concerning a public good is false?

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. This situation illustrates the voting inconsistency where a majority of voters prefer The

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the

Refer to the graphs which show demand curves reﬂecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. The collective willingness to pay for the ﬁrst unit of this public good is

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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Exam 5: Public Goods, Public Choice, and Government Failure

Explain the special-interest effect.

"Vote for my special local project and I will vote for yours." This political technique

What are the two characteristics that differentiate private goods from public goods?

The free-rider problem makes a good highly proﬁtable for a private ﬁrm to provide.

"Government failure" is a prominent topic in

Suppose that Steve and Susie each perceive $200 of marginal beneﬁt from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

The so-called pork-barrel politics refers to congressional members

"Earmarks" refer to

Unlike a private good, a public good

When voters have different opinions about an issue, the position that is most likely to be adopted is that of the

According to some economists, the private sector is more eﬃcient than the public sector mainly because

Why are the public sector and private sector "imperfect institutions"?

People enjoy outdoor holiday lighting displays and would be willing to pay to see them, but can't be made to pay. Because most people who put up lights are unable to charge others to view them, they don't put up as Many lights as people would like. This is an example of a

Which of the following statements concerning a public good is false?

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. This situation illustrates the voting inconsistency where a majority of voters prefer The

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the

Refer to the graphs which show demand curves reﬂecting the prices Alvin and Elmer are willing to pay for a public good, rather than do without it. The collective willingness to pay for the ﬁrst unit of this public good is

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters