Question 1

Refer to the table. The inconsistency illustrated by the table is that, while a majority of voters prefer the

Accepted Answer

A) highway to the lighthouse and the submarine to the highway, they also prefer the lighthouse to the submarine. 
B) lighthouse to the highway and the lighthouse to the submarine, they also prefer the submarine to the highway. 
C) highway to the lighthouse and the submarine to the lighthouse, they also prefer the submarine to the highway. 
D) lighthouse to the submarine and the highway to the submarine, they also prefer the highway to the lighthouse. 
A) highway to the lighthouse and the submarine to the highway, they also prefer the lighthouse to the submarine. 
B) lighthouse to the highway and the lighthouse to the submarine, they also prefer the submarine to the highway. 
C) highway to the lighthouse and the submarine to the lighthouse, they also prefer the submarine to the highway. 
D) lighthouse to the submarine and the highway to the submarine, they also prefer the highway to the lighthouse.

Question 2

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 3

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 4

Critics of government contend that the market system creates incentives and pressures for internal efficiency that are absent in the public sector.

Accepted Answer

A) True 
 B)False

Question 5

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient.

Accepted Answer

A) True 
 B)False

Question 6

The free-rider problem refers to the local government's problem of finding funds to provide free bus rides in the city.

Accepted Answer

A) True 
 B)False

Question 7

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 benefits of each successive scale of the project are given in the table below.   What is the net benefit of project scale 2?

Accepted Answer

A) $2 million 
B) $3 million 
C) $4 million 
D) $5 million 
A) $2 million 
B) $3 million 
C) $4 million 
D) $5 million

Question 8

What are quasi-public goods? Explain why quasi-public goods are often provided by government rather than private businesses.

Accepted Answer

A quasi-public good or service is one to

Question 9

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. If the marginal cost of the optimal quantity of this public good is $10, the optimal quantity must be

Accepted Answer

A) 1 unit. 
B) 2 units. 
C) 3 units. 
D) 4 units. 
A) 1 unit. 
B) 2 units. 
C) 3 units. 
D) 4 units.

Question 10

The sometimes inconsistent results coming from a series of paired-choice voting is due to

Accepted Answer

A) voters changing their preferences. 
B) irrational preferences among some voters. 
C) a normal consequence of majority voting. 
D) voters not having a good idea of their preferences. 
A) voters changing their preferences. 
B) irrational preferences among some voters. 
C) a normal consequence of majority voting. 
D) voters not having a good idea of their preferences.

Question 11

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Accepted Answer

A) if the deregulated industry quickly evolves into a monopoly. 
B) if the deregulated industry becomes more competitive. 
C) when the regulations covering the industry are tightened. 
D) when the industry ends up generating substantial external costs. 
A) if the deregulated industry quickly evolves into a monopoly. 
B) if the deregulated industry becomes more competitive. 
C) when the regulations covering the industry are tightened. 
D) when the industry ends up generating substantial external costs.

Question 12

Mohair loan subsidies, provided to Angora goat farmers, are an example of regulatory capture.

Accepted Answer

A) True 
 B)False

Question 13

One primary reason why regulatory capture may occur in an industry is that

Accepted Answer

A) the government designates unelected officials to head the various regulatory agencies of different industries. 
B) there is a lot of bribery and corruption going on in all major industries that the government seeks to regulate. 
C) the industry's leaders are the ones who pushed for the government to impose supervision and regulation over their industry. 
D) people who are qualified to supervise and regulate the industry often come from the industry itself. 
A) the government designates unelected officials to head the various regulatory agencies of different industries. 
B) there is a lot of bribery and corruption going on in all major industries that the government seeks to regulate. 
C) the industry's leaders are the ones who pushed for the government to impose supervision and regulation over their industry. 
D) people who are qualified to supervise and regulate the industry often come from the industry itself.

Question 14

A study of hospitals, power plants, and water utilities found that

Accepted Answer

A) public companies violated health and safety laws more than private companies. 
B) government employees are systematically less competent than those in the private sector. 
C) private companies violated health and safety laws more than public companies. 
D) there was no significant difference in the number of health and safety violations between public and private companies. 
A) public companies violated health and safety laws more than private companies. 
B) government employees are systematically less competent than those in the private sector. 
C) private companies violated health and safety laws more than public companies. 
D) there was no significant difference in the number of health and safety violations between public and private companies.

Question 15

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Accepted Answer

A) the median voter has the strongest preferences compared to the other voters. 
B) most voters strongly prefer the median view. 
C) extreme voters on either side of the median would prefer the median over the opposite extreme. 
D) voters' preferences are bell-shaped, with most of them falling on the median. 
A) the median voter has the strongest preferences compared to the other voters. 
B) most voters strongly prefer the median view. 
C) extreme voters on either side of the median would prefer the median over the opposite extreme. 
D) voters' preferences are bell-shaped, with most of them falling on the median.

Question 16

Answer the question based on the following information for a public good. Pₐ and Pᵦ are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society.   If the marginal cost of producing this good at the optimal quantity is $2, the optimal quantity must be

Accepted Answer

A) 5 units. 
B) 3 units. 
C) 1 unit. 
D) 2 units. 
E) 4 units. 
A) 5 units. 
B) 3 units. 
C) 1 unit. 
D) 2 units. 
E) 4 units.

Question 17

Cost-benefit analysis attempts to

Accepted Answer

A) compare the real worth, rather than the market values, of various goods and services. 
B) compare the relative desirability of alternative distributions of income. 
C) determine whether it is better to cut government expenditures or reduce taxes. 
D) compare the benefits and costs associated with any economic project or activity. 
A) compare the real worth, rather than the market values, of various goods and services. 
B) compare the relative desirability of alternative distributions of income. 
C) determine whether it is better to cut government expenditures or reduce taxes. 
D) compare the benefits and costs associated with any economic project or activity.

Question 18

Public choice economists

Accepted Answer

A) analyze the incidence of taxes. 
B) are also known as Keynesian economists. 
C) use the tools of economics to analyze decision making, politics, and elections in the public sector. 
D) are, by definition, economists employed by federal, state, and local governments. 
A) analyze the incidence of taxes. 
B) are also known as Keynesian economists. 
C) use the tools of economics to analyze decision making, politics, and elections in the public sector. 
D) are, by definition, economists employed by federal, state, and local governments.

Question 19

The major problem with paired-choice majority voting is that the outcome

Accepted Answer

A) is constant. 
B) is subject to bribery and abuse. 
C) may depend on the order of the voting. 
D) results in clear preferences among the choices. 
A) is constant. 
B) is subject to bribery and abuse. 
C) may depend on the order of the voting. 
D) results in clear preferences among the choices.

Question 20

The concept of limited and bundled choice, as used in public choice theory, refers to the fact that

Accepted Answer

A) politicians may not be objective in evaluating economic policy programs due to their individual biases. 
B) because of the importance of television and other modern communication media, the best and brightest candidates may not be the ones elected by voters. 
C) in an election, each voter must select a candidate who has various preferences (in a wide array of issues)that do not exactly match the preferences of the voter. 
D) the most economically efficient public policy programs may not be selected because political leaders do not know enough about economics. 
A) politicians may not be objective in evaluating economic policy programs due to their individual biases. 
B) because of the importance of television and other modern communication media, the best and brightest candidates may not be the ones elected by voters. 
C) in an election, each voter must select a candidate who has various preferences (in a wide array of issues)that do not exactly match the preferences of the voter. 
D) the most economically efficient public policy programs may not be selected because political leaders do not know enough about economics.

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

Refer to the table. The inconsistency illustrated by the table is that, while a majority of voters prefer 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

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

Critics of government contend that the market system creates incentives and pressures for internal efficiency that are absent in the public sector.

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient.

The free-rider problem refers to the local government's problem of finding funds to provide free bus rides in the city.

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 benefits of each successive scale of the project are given in the table below. What is the net benefit of project scale 2?

What are quasi-public goods? Explain why quasi-public goods are often provided by government rather than private businesses.

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. If the marginal cost of the optimal quantity of this public good is $10, the optimal quantity must be

The sometimes inconsistent results coming from a series of paired-choice voting is due to

Deregulation can solve the problem of regulatory capture and increase economic efficiency

Mohair loan subsidies, provided to Angora goat farmers, are an example of regulatory capture.

One primary reason why regulatory capture may occur in an industry is that

A study of hospitals, power plants, and water utilities found that

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Cost-benefit analysis attempts to

Public choice economists

The major problem with paired-choice majority voting is that the outcome

The concept of limited and bundled choice, as used in public choice theory, refers to the fact that

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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