Question 1

If U.S. consumers increase their spending on hybrid cars by 60 percent, and 60 percent more hybrid cars are produced, this is known as the

Accepted Answer

A) majority rule. 
B) proportional rule. 
C) government rule. 
D) profit rule. 
A) majority rule. 
B) proportional rule. 
C) government rule. 
D) profit rule.

Question 2

Which of the following is heavily subsidized by state and local governments?

Accepted Answer

A) Medicare 
B) Social Security 
C) public education 
D) food stamps 
A) Medicare 
B) Social Security 
C) public education 
D) food stamps

Question 3

A subsidy is sometimes used by the government to correct the problems associated with

Accepted Answer

A) negative externalities. 
B) positive externalities. 
C) public goods. 
D) monopolies. 
A) negative externalities. 
B) positive externalities. 
C) public goods. 
D) monopolies.

Question 4

Public goods are

Accepted Answer

A) any goods or services produced by the government. 
B) provided to additional users at no additional cost. 
C) provided only by the capitalistic system. 
D) provided only by the communist system. 
A) any goods or services produced by the government. 
B) provided to additional users at no additional cost. 
C) provided only by the capitalistic system. 
D) provided only by the communist system.

Question 5

A tax is sometimes used by government to correct the problems associated with

Accepted Answer

A) negative externalities. 
B) positive externalities. 
C) internal benefits. 
D) external benefits. 
A) negative externalities. 
B) positive externalities. 
C) internal benefits. 
D) external benefits.

Question 6

Graphically, the presence of an external cost that is ignored by producers can be shown as

Accepted Answer

A) a market supply curve to the left of the market supply curve for where the producers have to pay for the external cost. 
B) a market supply curve to the right of the market supply curve for which the producers have to pay for the external cost. 
C) a market supply curve the same as the market supply curve for which the producers have to pay for the external cost. 
D) the absence of a market supply curve. 
A) a market supply curve to the left of the market supply curve for where the producers have to pay for the external cost. 
B) a market supply curve to the right of the market supply curve for which the producers have to pay for the external cost. 
C) a market supply curve the same as the market supply curve for which the producers have to pay for the external cost. 
D) the absence of a market supply curve.

Question 7

The opportunity cost of providing a public good to an additional individual is

Accepted Answer

A) infinite. 
B) zero. 
C) impossible to determine. 
D) high because of the exclusion principle. 
A) infinite. 
B) zero. 
C) impossible to determine. 
D) high because of the exclusion principle.

Question 8

The funding of public education is

Accepted Answer

A) a private program. 
B) a subsidy program. 
C) done by voluntary contributions. 
D) provided by Social Security. 
A) a private program. 
B) a subsidy program. 
C) done by voluntary contributions. 
D) provided by Social Security.

Question 9

A government-inhibited good is one that

Accepted Answer

A) cannot be individually consumed. 
B) would be underproduced by the private market. 
C) should be subsidized to correct the market failure and productive inefficiency. 
D) has been deemed socially undesirable via the political process. 
A) cannot be individually consumed. 
B) would be underproduced by the private market. 
C) should be subsidized to correct the market failure and productive inefficiency. 
D) has been deemed socially undesirable via the political process.

Question 10

In a free market system, competition generates economic efficiency only when

Accepted Answer

A) individuals take into account the full opportunity cost of their actions. 
B) consumers are motivated by a sense of the greater good, not their own self-interest. 
C) firms are motivated by a sense of the greater good, not their desire for profit. 
D) economic decisions are taken out the hands of individuals and placed in the hands of government officials. 
A) individuals take into account the full opportunity cost of their actions. 
B) consumers are motivated by a sense of the greater good, not their own self-interest. 
C) firms are motivated by a sense of the greater good, not their desire for profit. 
D) economic decisions are taken out the hands of individuals and placed in the hands of government officials.

Question 11

In graphical form, the presence of an external benefit that is ignored by consumers can be shown as

Accepted Answer

A) a market demand curve to the left of the market demand curve for which the consumers take the external benefit into account. 
B) a market demand curve to the right of the market demand curve for which the consumers take the external benefit into account. 
C) a market demand curve the same as the market demand curve for which the consumers take the external benefit into account. 
D) the absence of a market demand curve. 
A) a market demand curve to the left of the market demand curve for which the consumers take the external benefit into account. 
B) a market demand curve to the right of the market demand curve for which the consumers take the external benefit into account. 
C) a market demand curve the same as the market demand curve for which the consumers take the external benefit into account. 
D) the absence of a market demand curve.

Question 12

Which of the following could best be categorized as a public good?

Accepted Answer

A) an apartment in a public housing project 
B) a pumpkin pie 
C) public fireworks 
D) a race track 
A) an apartment in a public housing project 
B) a pumpkin pie 
C) public fireworks 
D) a race track

Question 13

Public goods

Accepted Answer

A) are overproduced by unrestrained markets. 
B) are simply private goods that the government provides. 
C) cannot be consumed by more than one person without the degradation of the value of the good. 
D) can be consumed by more than one person without degradation of the value of the good. 
A) are overproduced by unrestrained markets. 
B) are simply private goods that the government provides. 
C) cannot be consumed by more than one person without the degradation of the value of the good. 
D) can be consumed by more than one person without degradation of the value of the good.

Question 14

In public education, the value of the services provided is

Accepted Answer

A) greater than the value that parents and students place on the services. 
B) equal to the value that parents and students place on the services. 
C) less than the value that parents and students place on the services. 
D) zero since they are a public good. 
A) greater than the value that parents and students place on the services. 
B) equal to the value that parents and students place on the services. 
C) less than the value that parents and students place on the services. 
D) zero since they are a public good.

Question 15

The government might provide a subsidy when

Accepted Answer

A) a negative externality exists. 
B) an effluent fee has been unsuccessful. 
C) it wants to increase the amount of a good consumed. 
D) it wants to transform a negative externality into a positive externality. 
A) a negative externality exists. 
B) an effluent fee has been unsuccessful. 
C) it wants to increase the amount of a good consumed. 
D) it wants to transform a negative externality into a positive externality.

Question 16

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

Accepted Answer

A) a public good. 
B) a merit good. 
C) an externality. 
D) the free-rider problem. 
A) a public good. 
B) a merit good. 
C) an externality. 
D) the free-rider problem.

Question 17

Society is likely to over-allocate resources to produce goods that

Accepted Answer

A) are public goods. 
B) are merit goods. 
C) generate positive externalities. 
D) generate negative externalities. 
A) are public goods. 
B) are merit goods. 
C) generate positive externalities. 
D) generate negative externalities.

Question 18

Examples of transfer payments are

Accepted Answer

A) wages, profits, and rents. 
B) Social Security checks and unemployment insurance payments. 
C) salaries of educators, police, and firefighters. 
D) federal government spending for national defense. 
A) wages, profits, and rents. 
B) Social Security checks and unemployment insurance payments. 
C) salaries of educators, police, and firefighters. 
D) federal government spending for national defense.

Question 19

-Refer to above figure in which negative externality existed. The government imposes a $1.00 pollution tax on the producer. Supply shifts leftward.

Accepted Answer

A) This tax will be shifted entirely to the consumer. 
B) This tax will be borne entirely by the producer. 
C) The amount of the tax shifted to the consumer depends on the consumer's reaction. 
D) The tax will be divided into equal amounts between consumer and producer. 
A) This tax will be shifted entirely to the consumer. 
B) This tax will be borne entirely by the producer. 
C) The amount of the tax shifted to the consumer depends on the consumer's reaction. 
D) The tax will be divided into equal amounts between consumer and producer.

Question 20

A government-inhibited good is often

Accepted Answer

A) produced by the government. 
B) subsidized. 
C) taxed. 
D) advertised. 
A) produced by the government. 
B) subsidized. 
C) taxed. 
D) advertised.

If U.S. consumers increase their spending on hybrid cars by 60 percent, and 60 percent more hybrid cars are produced, this is known as the

Which of the following is heavily subsidized by state and local governments?

A subsidy is sometimes used by the government to correct the problems associated with

Public goods are

A tax is sometimes used by government to correct the problems associated with

Graphically, the presence of an external cost that is ignored by producers can be shown as

The opportunity cost of providing a public good to an additional individual is

The funding of public education is

A government-inhibited good is one that

In a free market system, competition generates economic efficiency only when

In graphical form, the presence of an external benefit that is ignored by consumers can be shown as

Which of the following could best be categorized as a public good?

Public goods

In public education, the value of the services provided is

The government might provide a subsidy when

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

Society is likely to over-allocate resources to produce goods that

Examples of transfer payments are

-Refer to above figure in which negative externality existed. The government imposes a $1.00 pollution tax on the producer. Supply shifts leftward.

A government-inhibited good is often

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Public Spending and Public Choice

If U.S. consumers increase their spending on hybrid cars by 60 percent, and 60 percent more hybrid cars are produced, this is known as the

Which of the following is heavily subsidized by state and local governments?

A subsidy is sometimes used by the government to correct the problems associated with

Public goods are

A tax is sometimes used by government to correct the problems associated with

Graphically, the presence of an external cost that is ignored by producers can be shown as

The opportunity cost of providing a public good to an additional individual is

The funding of public education is

A government-inhibited good is one that

In a free market system, competition generates economic efficiency only when

In graphical form, the presence of an external benefit that is ignored by consumers can be shown as

Which of the following could best be categorized as a public good?

Public goods

In public education, the value of the services provided is

The government might provide a subsidy when

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

Society is likely to over-allocate resources to produce goods that

Examples of transfer payments are

-Refer to above figure in which negative externality existed. The government imposes a $1.00 pollution tax on the producer. Supply shifts leftward.

A government-inhibited good is often

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters