Question 1

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Accepted Answer

A) True 
 B)False

Question 2

If choice A wins over choice B in a majority vote, while choice B wins over choice C in a majority vote, then we can conclude that choice A would win over choice C.

Accepted Answer

A) True 
 B)False

Question 3

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community. No vote trading is allowed.  If the tax cost of this proposed project is $600 per person, a majority vote will

Accepted Answer

A)  defeat this project and resources will be underallocated to it.
B)  defeat this project and resources will be allocated efficiently.
C)  pass this project and resources will be overallocated to it.
D)  defeat this project and resources will be overallocated to it.E) All of the above
F) C) and D)

Question 4

Location subsidies include all the following except

Accepted Answer

A)  tax breaks.
B)  wage subsidies.
C)  free land.
D)  lots of regulations for the relocated business.
E)  a nice ribbon-cutting ceremony.F) C) and E)
G) B) and E)

Question 5

Refer to the provided supply and demand graph for a public good. Point c on the graph shows where the

Accepted Answer

A)  total benefit equals the total cost of the public good.
B)  marginal benefit equals the marginal cost of the public good.
C)  average benefit equals the average cost of the public good.
D)  total benefit of the public good is at the maximum.E) A) and B)
F) None of the above

Question 6

Suppose that Steve and Susie each perceive $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

Accepted Answer

A)  defeat this project and resources will be underallocated to it.
B)  defeat this project and resources will be efficiently allocated.
C)  pass this project and resources will be underallocated to it.
D)  pass this project and resources will be overallocated to it.E) A) and D)
F) C) and D)

Question 7

One prediction of the median-voter model is that during elections, candidates will tend to become "centrists."

Accepted Answer

A) True 
 B)False

Question 8

Explain the special-interest effect.

Accepted Answer

The special-interest effect is any polit...

Question 9

Government can reallocate resources away from private goods toward public goods, usually through

Accepted Answer

A)  import tariffs and quotas.
B)  the laws of supply and demand.
C)  taxes and government spending.
D)  positive and negative externalities.E) B) and C)
F) B) and D)

Question 10

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,

Accepted Answer

A)  a majority of the voters would favor the jail, 3 to 0.
B)  a majority of the voters would favor the park, 3 to 0.
C)  a majority of the voters would favor the jail, 2 to 1.
D)  a majority of the voters would favor the park, 2 to 1.E) B) and D)
F) A) and D)

Question 11

Assume that Abby, Ben, and Clara are the only citizens in a community. A proposed public good has a total cost of $1,000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $400 each to Abby, Ben, and Clara. Based on economic analysis, the public good should

Accepted Answer

A)  be produced, because the benefits are greater than the costs.
B)  not be produced, because the costs are greater than the benefits.
C)  be put to a vote and produced only if voters approve it.
D)  not be produced, even if voters vote in favor of it.E) C) and D)
F) B) and C)

Question 12

Refer to the table. In a choice between public safety and parks,

Accepted Answer

A)  the outcome would depend on which item was listed first on the ballot.
B)  a majority of voters would favor public safety.
C)  no voter decision is possible.
D)  a majority of voters would favor parks.E) A) and B)
F) C) and D)

Question 13

Public choice theory focuses on the economics of

Accepted Answer

A)  fiscal and monetary policy.
B)  the behavior of business firms.
C)  antitrust and regulatory policy.
D)  government decision making, politics, and elections.E) A) and C)
F) B) and C)

Question 14

In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters) . This is known as the

Accepted Answer

A)  principal-agent problem.
B)  limited and bundled choice problem.
C)  rent-seeking behavior problem.
D)  lack of accountability problem.E) C) and D)
F) All of the above

Question 15

A government is considering undertaking a construction project of an increasing scale (ranging from 1, 2, 3, to 4) . The estimated marginal costs and marginal benefits of each successive scale of the project are given in the table below.  What is the total amount that the government should spend on the construction project to attain maximum net benefits for the society?

Accepted Answer

A)  $8 million
B)  $14 million
C)  $19 million
D)  $37 millionE) None of the above
F) A) and B)

Question 16

"Earmarks" refer to

Accepted Answer

A)  the additional votes that must be taken when a voting paradox occurs.
B)  taxes that redistribute wealth or income from one income group to another.
C)  authorized expenditures benefiting a narrow, specifically designated group that are included in more comprehensive spending legislation.
D)  legislation focused on correcting negative externalities.E) None of the above
F) A) and B)

Question 17

Refer to the provided supply and demand graph for a public good. Which line segment would indicate the amount by which the marginal benefit of this public good exceeds the marginal cost at a certain quantity?

Accepted Answer

A)  de
B)  da
C)  ef
D)  abE) B) and D)
F) C) and D)

Question 18

Political logrolling always produces economically inefficient outcomes.

Accepted Answer

A) True 
 B)False

Question 19

The market system does not produce public goods because

Accepted Answer

A)  there is no need or demand for such goods.
B)  private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.
C)  public enterprises can produce such goods at lower cost than can private enterprises.
D)  their production seriously distorts the distribution of income.E) A) and D)
F) A) and B)

Question 20

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $80, what is the minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third unit?

Accepted Answer

A)  The amount cannot be determined with the information provided.
B)  $80
C)  $15
D)  $65
E)  $95F) A) and D)
G) None of the above

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

One prediction of the median-voter model is that during elections, candidates will tend to become "centrists."

Correct Answer
verified

"Earmarks" refer to

Correct Answer
verified

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community. No vote trading is allowed. If the tax cost of this proposed project is $600 per person, a majority vote will

Correct Answer
verified

If choice A wins over choice B in a majority vote, while choice B wins over choice C in a majority vote, then we can conclude that choice A would win over choice C.

Correct Answer
verified

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Correct Answer
verified

Refer to the provided supply and demand graph for a public good. Point c on the graph shows where the

Correct Answer
verified

Correct Answer
verified

Government can reallocate resources away from private goods toward public goods, usually through

Correct Answer
verified

Correct Answer
verified

Public choice theory focuses on the economics of

Correct Answer
verified

The market system does not produce public goods because

Correct Answer
verified

Explain the special-interest effect.

Correct Answer
verified
The special-interest effect is any polit...
View Answer

Suppose that Steve and Susie each perceive $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

Correct Answer
verified

Refer to the provided supply and demand graph for a public good. Which line segment would indicate the amount by which the marginal benefit of this public good exceeds the marginal cost at a certain quantity?

Correct Answer
verified

In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters) . This is known as the

Correct Answer
verified

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,

Correct Answer
verified

Political logrolling always produces economically inefficient outcomes.

Correct Answer
verified

Correct Answer
verified

Location subsidies include all the following except

Correct Answer
verified

Refer to the table. In a choice between public safety and parks,

Correct Answer
verified

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

One prediction of the median-voter model is that during elections, candidates will tend to become "centrists."

Correct AnswerverifiedShow Answer

"Earmarks" refer to

Correct AnswerverifiedShow Answer

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community. No vote trading is allowed. If the tax cost of this proposed project is $600 per person, a majority vote will

Correct AnswerverifiedShow Answer

If choice A wins over choice B in a majority vote, while choice B wins over choice C in a majority vote, then we can conclude that choice A would win over choice C.

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission's supervision of Wall Street financial firms is a possible example of regulatory capture.

Correct AnswerverifiedShow Answer

Refer to the provided supply and demand graph for a public good. Point c on the graph shows where the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Government can reallocate resources away from private goods toward public goods, usually through

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Public choice theory focuses on the economics of

Correct AnswerverifiedShow Answer

The market system does not produce public goods because

Correct AnswerverifiedShow Answer

Explain the special-interest effect.

Correct AnswerverifiedThe special-interest effect is any polit...View AnswerShow Answer

Suppose that Steve and Susie each perceive $200 of marginal benefit from a proposed new park, whereas Elizabeth perceives $800. If the proposed tax levied on each for the park would be $300, a majority vote will

Correct AnswerverifiedShow Answer

Refer to the provided supply and demand graph for a public good. Which line segment would indicate the amount by which the marginal benefit of this public good exceeds the marginal cost at a certain quantity?

Correct AnswerverifiedShow Answer

In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters) . This is known as the

Correct AnswerverifiedShow Answer

Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,

Correct AnswerverifiedShow Answer

Political logrolling always produces economically inefficient outcomes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Location subsidies include all the following except

Correct AnswerverifiedShow Answer

Refer to the table. In a choice between public safety and parks,

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The special-interest effect is any polit...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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