Question 1

Which of the following statements is NOT true about the sugar quota imposed by the United States government?

Accepted Answer

A)  Although sugar consumers are harmed by the quota, few of them even know of the quota's existence. 
B)  Sugar consumers wouldn't spend much time or effort to oppose the sugar quota even if they know about the quota. 
C)  Sugar producers are rationally informed and would seek to sustain the quota. 
D)  The quota is imposed to protect both sugar consumers and producers. 
A)  Although sugar consumers are harmed by the quota, few of them even know of the quota's existence. 
B)  Sugar consumers wouldn't spend much time or effort to oppose the sugar quota even if they know about the quota. 
C)  Sugar producers are rationally informed and would seek to sustain the quota. 
D)  The quota is imposed to protect both sugar consumers and producers.

Question 2

Data for the United States show that the incumbent party tends to win the election if:
I. personal disposable income is growing.
II. the inflation rate is low.
III. the political party has not been in power for too many continuous terms.

Accepted Answer

A)  I only 
B)  I and II only 
C)  I and III only 
D)  I, II, and III 
A)  I only 
B)  I and II only 
C)  I and III only 
D)  I, II, and III

Question 3

Suppose that a special interest group makes up 1% of society, and a proposed law would give them $10,000 of benefits but cost society $900,000. The special interest group will oppose this policy because the costs exceed the benefits.

Accepted Answer

A) True 
 B)False

Question 4

Why do studies show that food distribution is not better in economies with higher political competition?

Accepted Answer

A)  Higher political competition always ensures better food production in farming areas. 
B)  Increased competition between political parties leads voters to educate themselves on the availability of such distribution systems. 
C)  The threat of failure to get reelected spurs government into providing better food distribution systems. 
D)  Studies show that food distribution IS better in economies with higher political competition. 
A)  Higher political competition always ensures better food production in farming areas. 
B)  Increased competition between political parties leads voters to educate themselves on the availability of such distribution systems. 
C)  The threat of failure to get reelected spurs government into providing better food distribution systems. 
D)  Studies show that food distribution IS better in economies with higher political competition.

Question 5

When a policy is specialized in its impact, difficult to understand, and affects a small part of the economy, it is likely that lobbies and special interest groups will get their way.

Accepted Answer

A) True 
 B)False

Question 6

The median voter theorem states that:

Accepted Answer

A)  the median voter tends to be the most informed voter. 
B)  candidates whose policies reflect the preferences of the median voter are more likely to win an election. 
C)  political success depends on candidates taking positions that are either to the right or left of the political center. 
D)  politicians choose policies that, on average, generate more benefits than costs for the average voter. 
A)  the median voter tends to be the most informed voter. 
B)  candidates whose policies reflect the preferences of the median voter are more likely to win an election. 
C)  political success depends on candidates taking positions that are either to the right or left of the political center. 
D)  politicians choose policies that, on average, generate more benefits than costs for the average voter.

Question 7

According to Amartya Sen, the most powerful way to reduce the likelihood of famine is through:

Accepted Answer

A)  enhancement of food production. 
B)  improvement of distribution. 
C)  introduction of new technologies. 
D)  enhancement of democratic practices. 
A)  enhancement of food production. 
B)  improvement of distribution. 
C)  introduction of new technologies. 
D)  enhancement of democratic practices.

Question 8

Democracy tends to push politicians toward the ideal point of the ______ voter.

Accepted Answer

A)  median 
B)  first 
C)  representative 
D)  final 
A)  median 
B)  first 
C)  representative 
D)  final

Question 9

It is always irrational to be ignorant.

Accepted Answer

A) True 
 B)False

Question 10

The smaller a special interest group is in term of percentage of the overall population, the more political power it typically has.

Accepted Answer

A) True 
 B)False

Question 11

During election years personal disposable income ________ more than at other times, while inflation tends to ________.

Accepted Answer

A)  falls; rise. 
B)  grows; rise. 
C)  grows; fall. 
D)  falls; fall 
A)  falls; rise. 
B)  grows; rise. 
C)  grows; fall. 
D)  falls; fall

Question 12

The most important assumption of the median voter theorem is that:

Accepted Answer

A)  voters vote for the policy furthest from their ideal. 
B)  voters vote for the policy closest to their ideal. 
C)  half the voters vote for their ideal, but the other half do not. 
D)  there are several voting dimensions. 
A)  voters vote for the policy furthest from their ideal. 
B)  voters vote for the policy closest to their ideal. 
C)  half the voters vote for their ideal, but the other half do not. 
D)  there are several voting dimensions.

Question 13

Which of the following statements is FALSE?

Accepted Answer

A)  Economists support free and competitive markets. 
B)  Economists are skeptical about price controls and tariffs. 
C)  Economists favor command and control regulation. 
D)  Economists oppose super-high inflation rates. 
A)  Economists support free and competitive markets. 
B)  Economists are skeptical about price controls and tariffs. 
C)  Economists favor command and control regulation. 
D)  Economists oppose super-high inflation rates.

Question 14

The American Crystal Sugar PAC is rationally:

Accepted Answer

A)  ignorant. 
B)  informed. 
C)  concerned. 
D)  cooperative. 
A)  ignorant. 
B)  informed. 
C)  concerned. 
D)  cooperative.

Question 15

Special interest groups have an incentive to be:

Accepted Answer

A)  rationally ignorant. 
B)  rationally informed. 
C)  free riders. 
D)  forced riders. 
A)  rationally ignorant. 
B)  rationally informed. 
C)  free riders. 
D)  forced riders.

Question 16

In which of the following decisions is a person likely to be rationally ignorant?

Accepted Answer

A)  deciding which car to buy 
B)  deciding where to live 
C)  deciding which mayoral candidate to vote for 
D)  deciding which television show to watch 
A)  deciding which car to buy 
B)  deciding where to live 
C)  deciding which mayoral candidate to vote for 
D)  deciding which television show to watch

Question 17

Use the following to answer questions:
Figure: Kidney Trade Ban Policy Spectrum  
-(Figure: Kidney Trade Ban Policy Spectrum) Refer to the figure. If there are only two candidates, A and B, and an open market for kidney trading is the only issue being debated in this election, which candidate will win the election?

Accepted Answer

A)  A 
B)  B 
C)  Neither A nor B will win this election. 
D)  Both A and B will receive an equal number of votes. 
A)  A 
B)  B 
C)  Neither A nor B will win this election. 
D)  Both A and B will receive an equal number of votes.

Question 18

People who spend more time and effort investigating the advantages and disadvantages of different flat-screen televisions when they go to purchase one than they do investigating the strengths and weaknesses of presidential candidates are saying, in effect, that:

Accepted Answer

A)  they do not think it matters who is elected president. 
B)  they are irrational, because the choice of a president is obviously far more important than the choice of a TV. 
C)  a good TV is more important to their well-being than a good president. 
D)  they expect to use the information on the merits of alternative TVs to greater personal advantage than they could information on the merits of alternative presidential candidates. 
A)  they do not think it matters who is elected president. 
B)  they are irrational, because the choice of a president is obviously far more important than the choice of a TV. 
C)  a good TV is more important to their well-being than a good president. 
D)  they expect to use the information on the merits of alternative TVs to greater personal advantage than they could information on the merits of alternative presidential candidates.

Question 19

Do "good politics" and "good economics" always coincide? Explain why or why not.

Accepted Answer

We know that voters respond to economic

Question 20

What does the evidence from 60 years of United States data show regarding the growth rate in personal income in each quarter of a President's term in office?

Accepted Answer

A)  The growth rate holds steady at approximately 1.8%. 
B)  The growth rate increases in the quarters just after election. 
C)  The growth rate decreases in the quarters just before election. 
D)  The growth rate increases in the quarters just before election. 
A)  The growth rate holds steady at approximately 1.8%. 
B)  The growth rate increases in the quarters just after election. 
C)  The growth rate decreases in the quarters just before election. 
D)  The growth rate increases in the quarters just before election.

Exam 20: Political Economy and Public Choice

Which of the following statements is NOT true about the sugar quota imposed by the United States government?

Data for the United States show that the incumbent party tends to win the election if: I. personal disposable income is growing. II. the inflation rate is low. III. the political party has not been in power for too many continuous terms.

Suppose that a special interest group makes up 1% of society, and a proposed law would give them $10,000 of benefits but cost society $900,000. The special interest group will oppose this policy because the costs exceed the benefits.

Why do studies show that food distribution is not better in economies with higher political competition?

When a policy is specialized in its impact, difficult to understand, and affects a small part of the economy, it is likely that lobbies and special interest groups will get their way.

The median voter theorem states that:

According to Amartya Sen, the most powerful way to reduce the likelihood of famine is through:

Democracy tends to push politicians toward the ideal point of the ______ voter.

It is always irrational to be ignorant.

The smaller a special interest group is in term of percentage of the overall population, the more political power it typically has.

During election years personal disposable income ________ more than at other times, while inflation tends to ________.

The most important assumption of the median voter theorem is that:

Which of the following statements is FALSE?

The American Crystal Sugar PAC is rationally:

Special interest groups have an incentive to be:

In which of the following decisions is a person likely to be rationally ignorant?

People who spend more time and effort investigating the advantages and disadvantages of different flat-screen televisions when they go to purchase one than they do investigating the strengths and weaknesses of presidential candidates are saying, in effect, that:

Do "good politics" and "good economics" always coincide? Explain why or why not.

What does the evidence from 60 years of United States data show regarding the growth rate in personal income in each quarter of a President's term in office?

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

During election years personal disposable income more than at other times, while inflation tends to .