Question 1

The median voter theorem does not accurately predict an election outcome if:

Accepted Answer

A)  the election is dictated by a simple majority rule. 
B)  voters become rational about their election decisions. 
C)  voters always vote for the policy that is closest to their ideal point. 
D)  voters do not vote for the policy that is closest to their ideal point. 
A)  the election is dictated by a simple majority rule. 
B)  voters become rational about their election decisions. 
C)  voters always vote for the policy that is closest to their ideal point. 
D)  voters do not vote for the policy that is closest to their ideal point.

Question 2

If a special interest group represents 10% of society, and there is a proposed public policy that will cost society $1 million and benefit that special interest group $1 million, which of the following is the most likely outcome according to public choice theory?

Accepted Answer

A)  The special interest group will not lobby for the proposed policy because the policy will cost the group more than it will benefit it. 
B)  The special interest group will lobby for the proposed policy because the policy will benefit the group more than it will cost it. 
C)  The special interest group will not be able to make any decision on the proposed policy because its benefits equal its costs. 
D)  This policy will never be passed because the total costs and benefits are the same. 
A)  The special interest group will not lobby for the proposed policy because the policy will cost the group more than it will benefit it. 
B)  The special interest group will lobby for the proposed policy because the policy will benefit the group more than it will cost it. 
C)  The special interest group will not be able to make any decision on the proposed policy because its benefits equal its costs. 
D)  This policy will never be passed because the total costs and benefits are the same.

Question 3

There are three voters and two representatives in a democracy. Voter 1 supports government spending of $20. Voter 2 supports government spending of $60. Voter 3 supports government spending of $70. According to the median voter theorem, politicians will converge upon a spending bill of:

Accepted Answer

A)  $20. 
B)  $50. 
C)  $60. 
D)  $70. 
A)  $20. 
B)  $50. 
C)  $60. 
D)  $70.

Question 4

Which of the following was the main cause of the 1974 famine in Bangladesh?

Accepted Answer

A)  floods 
B)  lack of food 
C)  lack of economic and political freedoms 
D)  high rice prices 
A)  floods 
B)  lack of food 
C)  lack of economic and political freedoms 
D)  high rice prices

Question 5

Which of the following statements is TRUE?

Accepted Answer

A)  Small groups are less likely to favor efficient policies than large groups. 
B)  The larger the group, the more likely it will favor special interests rather than economic growth. 
C)  Quasi-democracies prefer a highly educated population because they are more accepting of the leadership's policies. 
D)  Oligarchies tend to use the print media to inform public debate and encourage political competition. 
A)  Small groups are less likely to favor efficient policies than large groups. 
B)  The larger the group, the more likely it will favor special interests rather than economic growth. 
C)  Quasi-democracies prefer a highly educated population because they are more accepting of the leadership's policies. 
D)  Oligarchies tend to use the print media to inform public debate and encourage political competition.

Question 6

Explain the assumptions behind the median voter theorem. In which cases will the median voter theorem NOT apply?

Accepted Answer

The median voter theorem is constructed

Question 7

If the benefits of informing oneself are greater than the costs, then ignorance is

Accepted Answer

A)  rational. 
B)  irrational. 
C)  not beneficial. 
D)  not costly. 
A)  rational. 
B)  irrational. 
C)  not beneficial. 
D)  not costly.

Question 8

It is sometimes irrational to be ignorant.

Accepted Answer

A) True 
 B)False

Question 9

Policy A adversely affects 50 million people at a cost of $1 per person. But Policy A also benefits 1,000 people at $30,000 per person. Which of the following statements is TRUE?

Accepted Answer

A)  Policy A will not become law because it hurts more people than it helps. 
B)  Policy A concentrates all the costs among a small group of people and all the benefits among a large group of people. 
C)  Policy A is likely to be supported by politicians even though it makes society worse off. 
D)  Because Policy A negatively affects many people, rational ignorance will not be a problem. 
A)  Policy A will not become law because it hurts more people than it helps. 
B)  Policy A concentrates all the costs among a small group of people and all the benefits among a large group of people. 
C)  Policy A is likely to be supported by politicians even though it makes society worse off. 
D)  Because Policy A negatively affects many people, rational ignorance will not be a problem.

Question 10

Imagine a beach with beachgoers evenly distributed throughout. It's a hot day and there are two ice cream vendors who start out far away from each other. They quickly discover that if they move closer to the center, they keep customers on their far side of the beach while poaching customers near their rival. Eventually, both vendors end up right next to each other in the middle of the beach. Which concept predicts the conclusion of this story?

Accepted Answer

A)  rational ignorance 
B)  opportunity cost 
C)  diffuse costs and concentrated benefits 
D)  median voter theorem 
A)  rational ignorance 
B)  opportunity cost 
C)  diffuse costs and concentrated benefits 
D)  median voter theorem

Question 11

In September 2009, President Obama placed high tariffs on imported tires from China. Why did the President do this?

Accepted Answer

A)  Because reducing imports from China will make America more prosperous. 
B)  The costs of the tariffs will be small compared with the benefits of saving American jobs. 
C)  Because tariffs will lower tire prices, which is especially important with the high unemployment at the time. 
D)  Although the policy harms the consumers of tires, the policy directly benefited the United Steelworkers, a special interest group that provides political support to the Democratic Party, of which President Obama is a member. 
A)  Because reducing imports from China will make America more prosperous. 
B)  The costs of the tariffs will be small compared with the benefits of saving American jobs. 
C)  Because tariffs will lower tire prices, which is especially important with the high unemployment at the time. 
D)  Although the policy harms the consumers of tires, the policy directly benefited the United Steelworkers, a special interest group that provides political support to the Democratic Party, of which President Obama is a member.

Question 12

According to Nobel Prize-winning economist Amartya Sen, the lack of democracy is the main reason for famine to occur throughout world history.

Accepted Answer

A) True 
 B)False

Question 13

Economists would generally agree with this quote: "There are many things of which a wise man might wish to be ignorant."

Accepted Answer

A) True 
 B)False

Question 14

In general, democracies are the:

Accepted Answer

A)  wealthiest countries around the world but the least free economically. 
B)  wealthiest countries around the world and have the highest levels of economic freedom. 
C)  poorest countries around the world but have the highest levels of economic freedom. 
D)  poorest countries around the world and the least free economically. 
A)  wealthiest countries around the world but the least free economically. 
B)  wealthiest countries around the world and have the highest levels of economic freedom. 
C)  poorest countries around the world but have the highest levels of economic freedom. 
D)  poorest countries around the world and the least free economically.

Question 15

An incumbent is more likely to win reelection if average unemployment during his first four-year term is less than unemployment in the last year of that term.

Accepted Answer

A) True 
 B)False

Question 16

As part of the American Recovery and Reinvestment Act, $7 million was earmarked to build a bridge over a railroad crossing so that 168 Nebraska town residents wouldn't have to wait for the trains to pass. Which of the following best explains why this proposal was passed?

Accepted Answer

A)  The benefits were highly diffused while the costs were very concentrated. 
B)  The costs were highly diffused while the benefits were very concentrated. 
C)  The costs were external while the benefits were internal. 
D)  The total benefit to the bridge was greater than the total cost. 
A)  The benefits were highly diffused while the costs were very concentrated. 
B)  The costs were highly diffused while the benefits were very concentrated. 
C)  The costs were external while the benefits were internal. 
D)  The total benefit to the bridge was greater than the total cost.

Question 17

According to the text, popular surveys about government programs show evidence that the majority of American voters are:

Accepted Answer

A)  perfectly rational. 
B)  irrational. 
C)  rationally ignorant. 
D)  well informed about all government programs. 
A)  perfectly rational. 
B)  irrational. 
C)  rationally ignorant. 
D)  well informed about all government programs.

Question 18

With certain political policies, the people who are harmed are rationally ignorant and have little incentive to oppose the policy.

Accepted Answer

A) True 
 B)False

Question 19

With respect to the sugar quota, the people who are harmed are _____ and the people who benefit are _____.

Accepted Answer

A)  rationally informed; rationally ignorant 
B)  rationally informed; irrationally ignorant 
C)  rationally ignorant; rationally informed 
D)  rationally ignorant; irrationally informed 
A)  rationally informed; rationally ignorant 
B)  rationally informed; irrationally ignorant 
C)  rationally ignorant; rationally informed 
D)  rationally ignorant; irrationally informed

Question 20

Which of the following explains why extreme candidates rarely win political elections?

Accepted Answer

A)  rational ignorance 
B)  median voter theorem 
C)  special interest groups 
D)  myopic voters 
A)  rational ignorance 
B)  median voter theorem 
C)  special interest groups 
D)  myopic voters

Exam 20: Political Economy and Public Choice

The median voter theorem does not accurately predict an election outcome if:

If a special interest group represents 10% of society, and there is a proposed public policy that will cost society $1 million and benefit that special interest group $1 million, which of the following is the most likely outcome according to public choice theory?

There are three voters and two representatives in a democracy. Voter 1 supports government spending of $20. Voter 2 supports government spending of $60. Voter 3 supports government spending of $70. According to the median voter theorem, politicians will converge upon a spending bill of:

Which of the following was the main cause of the 1974 famine in Bangladesh?

Which of the following statements is TRUE?

Explain the assumptions behind the median voter theorem. In which cases will the median voter theorem NOT apply?

If the benefits of informing oneself are greater than the costs, then ignorance is

It is sometimes irrational to be ignorant.

Policy A adversely affects 50 million people at a cost of $1 per person. But Policy A also benefits 1,000 people at $30,000 per person. Which of the following statements is TRUE?

In September 2009, President Obama placed high tariffs on imported tires from China. Why did the President do this?

According to Nobel Prize-winning economist Amartya Sen, the lack of democracy is the main reason for famine to occur throughout world history.

Economists would generally agree with this quote: "There are many things of which a wise man might wish to be ignorant."

In general, democracies are the:

An incumbent is more likely to win reelection if average unemployment during his first four-year term is less than unemployment in the last year of that term.

As part of the American Recovery and Reinvestment Act, $7 million was earmarked to build a bridge over a railroad crossing so that 168 Nebraska town residents wouldn't have to wait for the trains to pass. Which of the following best explains why this proposal was passed?

According to the text, popular surveys about government programs show evidence that the majority of American voters are:

With certain political policies, the people who are harmed are rationally ignorant and have little incentive to oppose the policy.

With respect to the sugar quota, the people who are harmed are _____ and the people who benefit are _____.

Which of the following explains why extreme candidates rarely win political elections?

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

With respect to the sugar quota, the people who are harmed are _ and the people who benefit are _.