Question 1

The unlawful misdirection of governmental resources for personal gain is known as

Accepted Answer

A) political corruption. 
B) logrolling. 
C) adverse selection. 
D) the special-interest effect. 
A) political corruption. 
B) logrolling. 
C) adverse selection. 
D) the special-interest effect.

Question 2

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is

Accepted Answer

A) the fallacy of limited decisions. 
B) the paradox of voting. 
C) the median-voter model. 
D) political logrolling. 
A) the fallacy of limited decisions. 
B) the paradox of voting. 
C) the median-voter model. 
D) political logrolling.

Question 3

Answer this question based on the following information for a public good. Pₐ and Pᵦ represent the prices that citizens (a)and (b), the only two people in this nation, are willing to pay for additional units of a quantity (Qc )of the public good. Qₛrepresents the quantity of the public good supplied by government at each of the collective prices.   If only 1 unit of this public good is produced, then the marginal benefit is

Accepted Answer

A) $3, and the marginal cost is $9. 
B) $4, and the marginal cost is $7. 
C) $6, and the marginal cost is $3. 
D) $9, and the marginal cost is $3. 
A) $3, and the marginal cost is $9. 
B) $4, and the marginal cost is $7. 
C) $6, and the marginal cost is $3. 
D) $9, and the marginal cost is $3.

Question 4

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Accepted Answer

A) True 
 B)False

Question 5

Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of

Accepted Answer

A) moral hazard. 
B) the principal-agent problem. 
C) logrolling. 
D) rent-seeking behavior. 
A) moral hazard. 
B) the principal-agent problem. 
C) logrolling. 
D) rent-seeking behavior.

Question 6

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars.   Based on cost-benefit analysis, the city should

Accepted Answer

A) not build any of these stadiums. 
B) build stadium E. 
C) build stadium C. 
D) build stadium D. 
A) not build any of these stadiums. 
B) build stadium E. 
C) build stadium C. 
D) build stadium D.

Question 7

Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except

Accepted Answer

A) government bureaucracies do not face the profit motive, which is a major incentive that guides private firms. 
B) government bureaucrats tend to deal with failing programs by putting more resources into the programs, rather than eliminating the program. 
C) incompetent workers gravitate toward government, while motivated workers gravitate toward the private sector. 
D) bureaucrats, along with the special-interest groups they serve, often gain enough political clout to keep their agencies going regardless of performance. 
A) government bureaucracies do not face the profit motive, which is a major incentive that guides private firms. 
B) government bureaucrats tend to deal with failing programs by putting more resources into the programs, rather than eliminating the program. 
C) incompetent workers gravitate toward government, while motivated workers gravitate toward the private sector. 
D) bureaucrats, along with the special-interest groups they serve, often gain enough political clout to keep their agencies going regardless of performance.

Question 8

Private firms can hardly produce a public good profitably because of

Accepted Answer

A) liability rules and lawsuits. 
B) the free-rider problem. 
C) shortages and surpluses. 
D) moral hazard and adverse selection. 
A) liability rules and lawsuits. 
B) the free-rider problem. 
C) shortages and surpluses. 
D) moral hazard and adverse selection.

Question 9

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

Accepted Answer

A) paradox of voting. 
B) concept of logrolling. 
C) median-voter model. 
D) Coase theorem. 
A) paradox of voting. 
B) concept of logrolling. 
C) median-voter model. 
D) Coase theorem.

Question 10

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 11

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.

Accepted Answer

A) True 
 B)False

Question 12

Explain the paradox of voting.

Accepted Answer

The paradox of voting is a situation in

Question 13

Answer the question based on the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars.   Suppose a five-person city council must decide via majority voting which of these stadiums to build. Also suppose that each of the stadium sizes has the support of one council member. According to the median-voter model, the council will ultimately vote in favor of stadium

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 14

The pursuit through government of special benefits at society's expense is called "rent seeking."

Accepted Answer

A) True 
 B)False

Question 15

The two main characteristics of a public good are

Accepted Answer

A) production at constant marginal cost and rising demand. 
B) nonexcludability and production at rising marginal cost. 
C) nonrivalry and nonexcludability. 
D) nonrivalry and large negative externalities. 
A) production at constant marginal cost and rising demand. 
B) nonexcludability and production at rising marginal cost. 
C) nonrivalry and nonexcludability. 
D) nonrivalry and large negative externalities.

Question 16

According to a study of hospitals, power plants, and water utilities, health and safety violations are more prevalent in public companies because

Accepted Answer

A) private companies have greater technical expertise than public companies. 
B) public companies are less likely to be fined for violating health and safety laws than private companies. 
C) laws for public companies are more stringent, making it more difficult for public companies to comply. 
D) public companies are more closely monitored, making it easier to detect violations. 
A) private companies have greater technical expertise than public companies. 
B) public companies are less likely to be fined for violating health and safety laws than private companies. 
C) laws for public companies are more stringent, making it more difficult for public companies to comply. 
D) public companies are more closely monitored, making it easier to detect violations.

Question 17

Suppose the U.S. House of Representatives is debating a bill to fund construction and maintenance for the nation's highway system. Representative Sandy Shady adds a provision to the bill that would fund a new public art museum in her district. The authorization of expenditure for the museum would be an example of

Accepted Answer

A) an earmark. 
B) an unfunded liability. 
C) a collective action problem. 
D) a principal-agent problem. 
A) an earmark. 
B) an unfunded liability. 
C) a collective action problem. 
D) a principal-agent problem.

Question 18

"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 19

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Accepted Answer

A) nonrival in consumption. 
B) rival in consumption. 
C) nonexcludable. 
D) excludable. 
A) nonrival in consumption. 
B) rival in consumption. 
C) nonexcludable. 
D) excludable.

Question 20

One implication of the median-voter model is that at any point in time, most voters will

Accepted Answer

A) be happy with the amount of government involvement in the economy. 
B) find government involvement in the economy to be too much. 
C) find government involvement in the economy to be too little. 
D) be unhappy with the amount of government involvement in the economy. 
A) be happy with the amount of government involvement in the economy. 
B) find government involvement in the economy to be too much. 
C) find government involvement in the economy to be too little. 
D) be unhappy with the amount of government involvement in the economy.

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

The unlawful misdirection of governmental resources for personal gain is known as

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is

The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars. Based on cost-benefit analysis, the city should

Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except

Private firms can hardly produce a public good profitably because of

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

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

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.

Explain the paradox of voting.

The pursuit through government of special benefits at society's expense is called "rent seeking."

The two main characteristics of a public good are

According to a study of hospitals, power plants, and water utilities, health and safety violations are more prevalent in public companies because

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

If one person's consumption of a good does not preclude another's consumption, the good is said to be

One implication of the median-voter model is that at any point in time, most voters will

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

Filters