Question 1

Which of the following represents why private production tends to be more efficient then government production?

Accepted Answer

A) Politicians have a strong incentive to support projects that have immediate and easily recognized benefits and distant and unidentifiable costs, even if the total costs outweigh the total benefits. 
B) Politicians have a strong incentive to support programs where the benefits are highly concentrated on special interest groups and the costs are widely dispersed among voters, even if the total costs outweigh the benefits. 
C) Private companies face a profit motive that keeps them operating efficiently, government bureaucracies use taxpayer money and, therefore, do not face this profit motive. 
D) All of the above are reasons why private production tends to be more efficient then government production. 
A) Politicians have a strong incentive to support projects that have immediate and easily recognized benefits and distant and unidentifiable costs, even if the total costs outweigh the total benefits. 
B) Politicians have a strong incentive to support programs where the benefits are highly concentrated on special interest groups and the costs are widely dispersed among voters, even if the total costs outweigh the benefits. 
C) Private companies face a profit motive that keeps them operating efficiently, government bureaucracies use taxpayer money and, therefore, do not face this profit motive. 
D) All of the above are reasons why private production tends to be more efficient then government production.

Question 2

Public choice analysis

Accepted Answer

A) assumes individuals in the public sector seek to serve the public interest rather than their own personal interests. 
B) is the study of the decision making of individual actors (such as voters, politicians, and bureaucrats) in the public sector. 
C) suggests that individual voters have a greater incentive to become informed when making choices among political candidates than when making choices about the products they consume. 
D) finds that the individuals managing government agencies generally have a much stronger incentive to be efficient than do individuals managing private businesses. 
A) assumes individuals in the public sector seek to serve the public interest rather than their own personal interests. 
B) is the study of the decision making of individual actors (such as voters, politicians, and bureaucrats) in the public sector. 
C) suggests that individual voters have a greater incentive to become informed when making choices among political candidates than when making choices about the products they consume. 
D) finds that the individuals managing government agencies generally have a much stronger incentive to be efficient than do individuals managing private businesses.

Question 3

Which of the following is a distinguishing characteristic of a user charge?

Accepted Answer

A) Persons pay roughly in proportion to the extent that they use the good or service. 
B) Persons with high incomes pay a larger amount than persons with lower incomes for the same good or service. 
C) Persons with high incomes pay a larger percentage of their income than persons with lower incomes for the same good or service. 
D) Persons with high incomes pay a smaller percentage of their income than persons with lower incomes for the same good or service. 
A) Persons pay roughly in proportion to the extent that they use the good or service. 
B) Persons with high incomes pay a larger amount than persons with lower incomes for the same good or service. 
C) Persons with high incomes pay a larger percentage of their income than persons with lower incomes for the same good or service. 
D) Persons with high incomes pay a smaller percentage of their income than persons with lower incomes for the same good or service.

Question 4

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

Accepted Answer

A) based on careful analysis of benefits relative to cost. 
B) designed to redistribute income from the rich to the poor. 
C) that reflect the political attractiveness of special-interest issues. 
D) that promote the general welfare. 
A) based on careful analysis of benefits relative to cost. 
B) designed to redistribute income from the rich to the poor. 
C) that reflect the political attractiveness of special-interest issues. 
D) that promote the general welfare.

Question 5

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

Accepted Answer

A) producers are generally more intelligent and, therefore, better informed. 
B) producers are generally better organized than consumers. 
C) producers are better educated than consumers. 
D) the number of producers affected by the outcome of a particular political issue is usually greater than the number of consumers affected. 
A) producers are generally more intelligent and, therefore, better informed. 
B) producers are generally better organized than consumers. 
C) producers are better educated than consumers. 
D) the number of producers affected by the outcome of a particular political issue is usually greater than the number of consumers affected.

Question 6

The term pork-barrel legislation refers to

Accepted Answer

A) government spending programs financed with user charges. 
B) the exchange between legislators of their votes on issues. 
C) legislation that bundles together a number of projects, each benefiting local interests at the expense of general taxpayers. 
D) the actions of legislators who are willing to trade their political votes for campaign contributions from special interest groups. 
A) government spending programs financed with user charges. 
B) the exchange between legislators of their votes on issues. 
C) legislation that bundles together a number of projects, each benefiting local interests at the expense of general taxpayers. 
D) the actions of legislators who are willing to trade their political votes for campaign contributions from special interest groups.

Question 7

Which of the following statements is False?

Accepted Answer

A) Political activities consistent with economic efficiency tend to emerge naturally from the unconstrained democratic political process. 
B) Constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
C) Rent-seeking activity tends to retard the economic prosperity of a nation because it takes resources away from productive private sector activities. 
D) Unconstrained democratic governments often enact special-interest programs that waste resources and impair the standard of living of a country. 
A) Political activities consistent with economic efficiency tend to emerge naturally from the unconstrained democratic political process. 
B) Constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. 
C) Rent-seeking activity tends to retard the economic prosperity of a nation because it takes resources away from productive private sector activities. 
D) Unconstrained democratic governments often enact special-interest programs that waste resources and impair the standard of living of a country.

Question 8

Senator Spendall is able to use his position on an important committee to set aside government funding specifically for a new bridge in his hometown. This is an example of

Accepted Answer

A) earmarking. 
B) logrolling. 
C) pork-barrel legislation. 
D) the invisible hand principle. 
A) earmarking. 
B) logrolling. 
C) pork-barrel legislation. 
D) the invisible hand principle.

Question 9

Use the figure below to answer the following question(s).
Figure 6-2
  
-Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. When the structure of production and consumption for a good places it in quadrant B,

Accepted Answer

A) consumers have little incentive to search out and patronize low-cost suppliers. 
B) private producers of such goods will have little incentive to operate efficiently and to keep prices low. 
C) goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs. 
D) both a and b, but not c, will be true. 
A) consumers have little incentive to search out and patronize low-cost suppliers. 
B) private producers of such goods will have little incentive to operate efficiently and to keep prices low. 
C) goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs. 
D) both a and b, but not c, will be true.

Question 10

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

Accepted Answer

A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching. 
A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching.

Question 11

Use the figure below to answer the following question(s).
Figure 6-1
  
-Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which types of projects would government action most likely work well, undertaking only efficient projects and rejecting inefficient ones?

Accepted Answer

A) types A and B 
B) types B and D 
C) types B and C 
D) types A and D 
A) types A and B 
B) types B and D 
C) types B and C 
D) types A and D

Question 12

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

Accepted Answer

A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching. 
A) logrolling. 
B) rent seeking. 
C) influence peddling. 
D) redistribution searching.

Question 13

As methods of economic organization, the market and the public sector are similar in which of the following ways?

Accepted Answer

A) Income and power are distributed equally in both sectors. 
B) In both sectors, economic activity is undertaken only when it satisfies the criterion for economic efficiency. 
C) In both sectors, economic exchange is completely voluntary. 
D) Someone must cover the cost associated with the provision of scarce goods in both sectors. 
A) Income and power are distributed equally in both sectors. 
B) In both sectors, economic activity is undertaken only when it satisfies the criterion for economic efficiency. 
C) In both sectors, economic exchange is completely voluntary. 
D) Someone must cover the cost associated with the provision of scarce goods in both sectors.

Question 14

Use the figure below to answer the following question(s).
Figure 6-1
  
-Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which type would the government most likely fail to undertake many projects that would be considered efficient or productive (in other words, do too few of them relative to economic efficiency)?

Accepted Answer

A) type A 
B) type B 
C) type C 
D) type D 
A) type A 
B) type B 
C) type C 
D) type D

Question 15

Scenario 6-1
The quotation below relates to the following question(s).
"The ideal policy, from the viewpoint of the state, is one with identifiable beneficiaries, each of whom is helped appreciably, at the cost of many unidentifiable persons, none of whom is hurt very much." (George Stigler, A Dialogue on the Proper Economic Role of the State)
-Refer to Scenario 6-1. This statement is probably

Accepted Answer

A) incorrect because voters are well informed on a wide range of political issues. 
B) incorrect because the political process dilutes the influence of special interest groups, because like other citizens, their members have only one vote. 
C) correct because the well-informed voter will favor policies that cater to the views of small groups of people. 
D) correct because voters who have a strong personal interest in an issue will tend to support candidates who cater to their views, whereas most other voters ignore the issue. 
A) incorrect because voters are well informed on a wide range of political issues. 
B) incorrect because the political process dilutes the influence of special interest groups, because like other citizens, their members have only one vote. 
C) correct because the well-informed voter will favor policies that cater to the views of small groups of people. 
D) correct because voters who have a strong personal interest in an issue will tend to support candidates who cater to their views, whereas most other voters ignore the issue.

Question 16

According to the Bureau of Economic Analysis, government income transfer payments amounted to approximately what percent of national income?

Accepted Answer

A) 5 percent 
B) 16 percent 
C) 28 percent 
D) 50 percent 
A) 5 percent 
B) 16 percent 
C) 28 percent 
D) 50 percent

Question 17

When voters pay in proportion to the benefits received from an economic action of the government, if the government activity is productive,

Accepted Answer

A) all voters will gain. 
B) only a smaller proportion of voters will gain. 
C) less than a simple majority of voters will gain. 
D) approximately 50 percent of the voters will gain. 
A) all voters will gain. 
B) only a smaller proportion of voters will gain. 
C) less than a simple majority of voters will gain. 
D) approximately 50 percent of the voters will gain.

Question 18

Use the figure below to answer the following question(s).
Figure 6-2
  
-Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. In which case is the incentive of producers to be efficient and the incentive for consumers to economize the weakest?

Accepted Answer

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

Question 19

Which of the following factors explains why managers of government agencies have little incentive to achieve operational efficiency?

Accepted Answer

A) Public-sector managers have no fear of bankruptcy when operational efficiency is not achieved. 
B) Public-sector managers face fierce competition. 
C) It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
D) All of the above explain why government agencies have little incentive to be efficient. 
A) Public-sector managers have no fear of bankruptcy when operational efficiency is not achieved. 
B) Public-sector managers face fierce competition. 
C) It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
D) All of the above explain why government agencies have little incentive to be efficient.

Question 20

Which of the following factors explains why managers of government agencies (the public sector) have little incentive to operate efficiently?

Accepted Answer

A) It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
B) Public-sector managers face fierce competition. 
C) Public-sector managers have no fear of losses and bankruptcy when operational efficiency is not achieved. 
D) All of the above explain why government agencies have little incentive to be efficient. 
A) It is relatively easy for voters to detect operational inefficiency in the public sector and do something to correct it. 
B) Public-sector managers face fierce competition. 
C) Public-sector managers have no fear of losses and bankruptcy when operational efficiency is not achieved. 
D) All of the above explain why government agencies have little incentive to be efficient.

Exam 6: The Economics of Collective Decision-Making

Which of the following represents why private production tends to be more efficient then government production?

Public choice analysis

Which of the following is a distinguishing characteristic of a user charge?

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

Producers tend to be better represented in lobbying efforts and other elements of the political process than consumers because

The term pork-barrel legislation refers to

Which of the following statements is False?

Senator Spendall is able to use his position on an important committee to set aside government funding specifically for a new bridge in his hometown. This is an example of

Use the figure below to answer the following question(s). Figure 6-2 -Figure 6-2 illustrates the four possibilities of the structure of production and consumption for a good or service. When the structure of production and consumption for a good places it in quadrant B,

In 2006, the American Association of Retired Persons (AARP) spent over $70 million on lobbying-related expenses in an attempt to get policies enacted that would benefit retirees. In economics, the term used to describe such activity is

In economics, actions by individuals and interest groups designed to influence public policy in a manner that will either directly or indirectly redistribute more income to themselves are known as

As methods of economic organization, the market and the public sector are similar in which of the following ways?

According to the Bureau of Economic Analysis, government income transfer payments amounted to approximately what percent of national income?

When voters pay in proportion to the benefits received from an economic action of the government, if the government activity is productive,

Which of the following factors explains why managers of government agencies have little incentive to achieve operational efficiency?

Which of the following factors explains why managers of government agencies (the public sector) have little incentive to operate efficiently?

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters