Question 1

New Normal University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism. The university is now considering several alternative levels of crime control. This table shows the expected total annual costs and benefits of these alternatives.  The net benefits of crime control for Level 3 are

Accepted Answer

A)  $20,000.
B)  $10,000.
C)  $40,000.
D)  $100,000.
E)  $140,000.F) C) and D)
G) C) and E)

Question 2

The trading of votes by elected officials to secure favorable outcomes is called

Accepted Answer

A)  splitting the difference.
B)  social engineering.
C)  logrolling.
D)  grandstanding.E) A) and B)
F) A) and C)

Question 3

Nonrivalry and nonexcludability are the main characteristics of

Accepted Answer

A)  consumption goods.
B)  capital goods.
C)  private goods.
D)  public goods.E) A) and C)
F) B) and D)

Question 4

Interest groups result when people

Accepted Answer

A)  in a certain zip code vote together.
B)  who share strong preferences on a choice band together.
C)  do not all vote in elections.
D)  do not have strong preferences on the issues to be voted on.E) A) and B)
F) A) and C)

Question 5

Explain the principal-agent problem for a representative democracy.

Accepted Answer

In public choice theory, there is a conf...

Question 6

Voters are making a choice to spend money on three projects: a dam, a school, or a road. In the choice between the dam and the school, the majority favors the school. In a choice between a dam and a road, the majority favors a dam. In a choice between a road and a school, the majority favors a road. These rankings indicate that majority voting may

Accepted Answer

A)  result in economically efficient outcomes because of rent-seeking behavior.
B)  reflect irrational preferences.
C)  produce inconsistent choices.
D)  lead to consistent choices in spite of irrational community preferences.E) C) and D)
F) None of the above

Question 7

The following data are for a series of increasingly extensive flood-control projects.  Plan C entails

Accepted Answer

A)  marginal benefits in excess of marginal costs.
B)  fewer spillovers than either Plan A or Plan B.
C)  an overallocation of resources to flood control.
D)  an underallocation of resources to flood control.E) A) and B)
F) None of the above

Question 8

Which would be an avenue for resolving the inefficiencies associated with majority voting?

Accepted Answer

A)  the paradox of voting
B)  progressive taxation
C)  proportional taxation
D)  interest groupsE) B) and D)
F) A) and D)

Question 9

If many people in a community get flu shots, the whole community benefits, including those who did not get flu shots. Therefore, not enough people may decide to get the shots. This is one illustration of

Accepted Answer

A)  the market allocating resources efficiently.
B)  monopoly power due to lack of competition.
C)  supply-side market failure.
D)  demand-side market failure.E) None of the above
F) B) and D)

Question 10

The following data are for a series of increasingly extensive flood-control projects.  For Plan D marginal costs and marginal benefits are

Accepted Answer

A)  $16,000 and $28,000, respectively.
B)  $24,000 and $18,000, respectively.
C)  $28,000 and $12,000, respectively.
D)  $72,000 and $64,000, respectively.E) None of the above
F) All of the above

Question 11

Answer the question based on the following information for four highway programs of increasing scope. All figures are in millions of dollars.  The data indicate that

Accepted Answer

A)  there is no highway program that is economically justifiable based on cost-benefit analysis.
B)  the marginal cost and marginal benefit of Program A are $2 and $9, respectively.
C)  the marginal cost and marginal benefit of Program C are $12 and $21, respectively.
D)  program D is optimal because it maximizes the total benefit.E) All of the above
F) A) and B)

Question 12

Which one of the following topics would be of the most interest to a public choice economist?

Accepted Answer

A)  the theory of comparative advantage
B)  the law of increasing opportunity cost
C)  inflation and unemployment
D)  rent-seeking behaviorE) B) and D)
F) None of the above

Question 13

The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.

Accepted Answer

A) True 
 B)False

Question 14

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $5. Government should produce the fifth unit of the public good if the marginal cost is less than or equal to

Accepted Answer

A)  $5.
B)  $40.
C)  $35.
D)  $20.
E)  $15.F) A) and B)
G) B) and D)

Question 15

In 2018, U.S. federal government legislation authorized

Accepted Answer

A)  152 earmarks, totaling $3.3 billion.
B)  232 earmarks, totaling $14.7 billion.
C)  1,160 earmarks, totaling $19.6 billion.
D)  11,700 earmarks, totaling $16.9 billion.E) A) and B)
F) A) and C)

Question 16

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 cost and total benefit of the scale-3 project?

Accepted Answer

A)  Total cost is $18 million, and total benefit is $19 million.
B)  Total cost is $24 million, and total benefit is $27 million.
C)  Total cost is $37 million, and total benefit is $41 million.
D)  Total cost is $65 million, and total benefit is $66 million.E) B) and D)
F) B) and C)

Question 17

The median-voter model implies that a political office seeker will

Accepted Answer

A)  adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent.
B)  adopt less extreme views when seeking his or her party's nomination than when running against the other party's opponent.
C)  favor extensive government spending because demand curves for public goods are added vertically rather than horizontally.
D)  favor the private resolution of externality problems rather than governmental intervention.E) All of the above
F) C) and D)

Question 18

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 $100, 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)  $35
B)  $100
C)  $65
D)  The amount cannot be determined with the information provided.E) B) and D)
F) B) and C)

Question 19

Answer this question based on the following information for a public good. Pₐ and Pᵦ represent the prices that citizens (a) and (b) , the only two people in this nation, are willing to pay for additional units of a quantity (Qc ) of the public good. Qₛrepresents the quantity of the public good supplied by government at each of the collective prices. c ) of the public good. Qₛrepresents the quantity of the public good supplied by government at each of the collective prices.   In equilibrium, the marginal benefit and cost of the public good will be A) $7. B) $6. C) $5. D) $3. " class="answers-bank-image d-inline" rel="preload" > In equilibrium, the marginal benefit and cost of the public good will be

Accepted Answer

A)  $7.
B)  $6.
C)  $5.
D)  $3.E) A) and C)
F) A) and D)

Question 20

Regulatory capture is said to have occurred when which of the following is true?

Accepted Answer

A)  Rules and enforcement in an industry are heavily influenced by the industry being regulated.
B)  One firm controls an entire market, having captured customers away from other firms.
C)  Government imposes excessive regulations in an industry, resulting in inefficiencies.
D)  Consumers make all the rules for an industry, forcing firms into inefficient production methods.E) A) and C)
F) B) and D)

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

In 2018, U.S. federal government legislation authorized

Correct Answer
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Correct Answer
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The median-voter model implies that a political office seeker will

Correct Answer
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Which one of the following topics would be of the most interest to a public choice economist?

Correct Answer
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Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $5. Government should produce the fifth unit of the public good if the marginal cost is less than or equal to

Correct Answer
verified

Which would be an avenue for resolving the inefficiencies associated with majority voting?

Correct Answer
verified

Correct Answer
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Interest groups result when people

Correct Answer
verified

The following data are for a series of increasingly extensive flood-control projects. For Plan D marginal costs and marginal benefits are

Correct Answer
verified

The trading of votes by elected officials to secure favorable outcomes is called

Correct Answer
verified

Correct Answer
verified

The following data are for a series of increasingly extensive flood-control projects. Plan C entails

Correct Answer
verified

If many people in a community get flu shots, the whole community benefits, including those who did not get flu shots. Therefore, not enough people may decide to get the shots. This is one illustration of

Correct Answer
verified

The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.

Correct Answer
verified

Explain the principal-agent problem for a representative democracy.

Correct Answer
verified
In public choice theory, there is a conf...
View Answer

Correct Answer
verified

Regulatory capture is said to have occurred when which of the following is true?

Correct Answer
verified

Correct Answer
verified

Nonrivalry and nonexcludability are the main characteristics of

Correct Answer
verified

Answer the question based on the following information for four highway programs of increasing scope. All figures are in millions of dollars. The data indicate that

Correct Answer
verified

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

In 2018, U.S. federal government legislation authorized

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The median-voter model implies that a political office seeker will

Correct AnswerverifiedShow Answer

Which one of the following topics would be of the most interest to a public choice economist?

Correct AnswerverifiedShow Answer

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $5. Government should produce the fifth unit of the public good if the marginal cost is less than or equal to

Correct AnswerverifiedShow Answer

Which would be an avenue for resolving the inefficiencies associated with majority voting?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Interest groups result when people

Correct AnswerverifiedShow Answer

The following data are for a series of increasingly extensive flood-control projects. For Plan D marginal costs and marginal benefits are

Correct AnswerverifiedShow Answer

The trading of votes by elected officials to secure favorable outcomes is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The following data are for a series of increasingly extensive flood-control projects. Plan C entails

Correct AnswerverifiedShow Answer

If many people in a community get flu shots, the whole community benefits, including those who did not get flu shots. Therefore, not enough people may decide to get the shots. This is one illustration of

Correct AnswerverifiedShow Answer

The special-interest effect in government is the reason why firms in some industries are willing to pay huge amounts of money to lobbyists.

Correct AnswerverifiedShow Answer

Explain the principal-agent problem for a representative democracy.

Correct AnswerverifiedIn public choice theory, there is a conf...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Regulatory capture is said to have occurred when which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Nonrivalry and nonexcludability are the main characteristics of

Correct AnswerverifiedShow Answer

Answer the question based on the following information for four highway programs of increasing scope. All figures are in millions of dollars. The data indicate that

Correct AnswerverifiedShow Answer

Correct Answer
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In public choice theory, there is a conf...
View Answer

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Correct Answer
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