Question 1

Logrolling can either increase or diminish economic eﬃciency.

Accepted Answer

A) True 
 B)False

Question 2

Explain the paradox of voting.

Accepted Answer

The paradox of voting is a situation in ...

Question 3

What are quasi-public goods? Explain why quasi-public goods are often provided by government rather than
private businesses.

Accepted Answer

A quasi-public good or service is one to...

Question 4

Narrow, speciﬁcally designated expenditures that are included in more comprehensive legislation are known as

Accepted Answer

A)   earmarks.
B)   logrolls.
C)   beneﬁts-received allocations.
D)   progressive expenditures.E) A) and B)
F) A) and C)

Question 5

The ﬁeld of economics that analyzes government decision making, politics, and elections is called

Accepted Answer

A)   public ﬁnance.
B)   public choice theory.
C)   collective economics.
D)   political economy.E) A) and C)
F) None of the above

Question 6

Why would private business be considered more eﬃcient than public agencies?

Accepted Answer

Some economists contend that public agen...

Question 7

Political corruption occurs whenever

Accepted Answer

A)   logrolling is used to secure votes for controversial legislation.
B)   government oﬃcials use unlawful misdirection of governmental resources for their own personal gain.
C)   special interest groups contribute to elected oﬃcials, who in turn support legislation that beneﬁts the special interest group.
D)   there is pork barrel politics involved.E) None of the above
F) C) and D)

Question 8

In thinking about the "principal-agent problem" in a democratic government, we assign the role of "principal" to
the government.

Accepted Answer

A) True 
 B)False

Question 9

Regulatory capture in government happens because the people who are most qualiﬁed to supervise and
regulate an industry oftentimes are or have been the leaders of the industry.

Accepted Answer

A) True 
 B)False

Question 10

Deregulation

Accepted Answer

A)   tends to improve outcomes in industries generating substantial negative externalities.
B)   eliminates regulatory capture and can improve outcomes by increasing competition.
C)   is most appropriate to undertake by government agencies responsible for human safety, ﬁnancial regulation, and environmental protection.
D)   always generates greater economic eﬃciency.E) B) and C)
F) A) and B)

Question 11

The idea of government failure includes all of the following except

Accepted Answer

A)   the special-interest effect.
B)   bureaucratic ineﬃciency.
C)   pressure by special-interest groups.
D)   extensive positive externalities from public and quasi-public goods.E) B) and C)
F) None of the above

Question 12

Suppose a college economics department decides to use a single economics text for all sections of principles of economics. Also assume that the three individual members of the textbook selection committee have the
Following preferences.
 Assuming all other textbook qualities except analytical level are the same, majority voting will result in the
Committee

Accepted Answer

A)   being deadlocked and unable to decide on a book.
B)   selecting the C/F book.
C)   selecting the M/B book.
D)   selecting the O/S book.E) None of the above
F) A) and B)

Question 13

Rent-seeking behavior in public choice theory refers to

Accepted Answer

A)   politicians trading votes with one another.
B)   politicians receiving perks and freebies from businesses trying to sway their votes.
C)   speciﬁc groups appealing to government for special beneﬁts at someone else's expense.
D)   politicians getting low rent for their living quarters when government is in session.E) C) and D)
F) A) and B)

Question 14

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Accepted Answer

A)   nonrival in consumption.
B)   rival in consumption.
C)   nonexcludable.
D)   excludable.E) All of the above
F) A) and B)

Question 15

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can deﬁnitively conclude

Accepted Answer

A)   that political corruption has occurred.
B)   that logrolling has occurred.
C)   that a principal-agent problem has occurred.
D)   nothing; the Road Runner Club may have donated to Senator Sly because he already supported the jogging paths.E) A) and C)
F) A) and B)

Question 16

Which of the following is related to the special-interest effect?

Accepted Answer

A)   pork-barrel politics
B)   earmarks
C)   logrolling
D)   all of theseE) All of the above
F) A) and B)

Question 17

In the median-voter model, the median voter refers to the voter who makes her choice at the midpoint of the
voting period.

Accepted Answer

A) True 
 B)False

Question 18

The major problem with paired-choice majority voting is that the outcome

Accepted Answer

A)   is constant.
B)   is subject to bribery and abuse.
C)   may depend on the order of the voting.
D)   results in clear preferences among the choices.E) B) and D)
F) B) and C)

Question 19

Assume that a government is considering a new social program and may choose to include in this program one of four progressively larger projects. The marginal cost and the marginal bene?ts of each of the four
Projects are given in the table below.
  Project  Marginal Cost  Marginal Benefit A$1 Billion $2 Billion B2 Billion 3 Billion C5 Billion 7 Billion D7 Billion 8 Billion \begin{array} { | c | c | c | } \hline 	ext { Project } & 	ext { Marginal Cost } & 	ext { Marginal Benefit } \\hline A & \$ 1 	ext { Billion } & \$ 2 	ext { Billion } \\hline B & 2 	ext { Billion } & 3 	ext { Billion } \\hline C & 5 	ext { Billion } & 7 	ext { Billion } \\hline D & 7 	ext { Billion } & 8 	ext { Billion } \\hline\end{array} Project ABCD​ Marginal Cost $1 Billion 2 Billion 5 Billion 7 Billion ​ Marginal Benefit $2 Billion 3 Billion 7 Billion 8 Billion ​​  Suppose that the government chooses to do project C. What is the total cost and total bene?t of doing project
C?

Accepted Answer

A)   Total cost is $5 billion, and total bene?t is $7 billion.
B)   Total cost is $4 billion, and total bene?t is $7 billion.
C)   Total cost is $8 billion, and total bene?t is $12 billion.
D)   Total cost is $15 billion, and total bene?t is $20 billion. E) C) and D)
F) A) and D)

Question 20

According to the paradox of voting,

Accepted Answer

A)   public goods that cost more than the total beneﬁts they confer may get produced under majority voting.
B)   trading of votes may either add to or subtract from economic eﬃciency.
C)   the median voter decides what public goods all voters should have.
D)   majority voting fails, under some circumstances, to make consistent choices that reﬂect the community's underlying preferences.E) A) and B)
F) C) and D)

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

Which of the following is related to the special-interest effect?

Correct Answer
verified

Logrolling can either increase or diminish economic eﬃciency.

Correct Answer
verified

The major problem with paired-choice majority voting is that the outcome

Correct Answer
verified

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can deﬁnitively conclude

Correct Answer
verified

Explain the paradox of voting.

Correct Answer
verified
The paradox of voting is a situation in ...
View Answer

The ﬁeld of economics that analyzes government decision making, politics, and elections is called

Correct Answer
verified

Correct Answer
verified

Deregulation

Correct Answer
verified

Political corruption occurs whenever

Correct Answer
verified

According to the paradox of voting,

Correct Answer
verified

Regulatory capture in government happens because the people who are most qualiﬁed to supervise and regulate an industry oftentimes are or have been the leaders of the industry.

Correct Answer
verified

Correct Answer
verified

What are quasi-public goods? Explain why quasi-public goods are often provided by government rather than private businesses.

Correct Answer
verified
A quasi-public good or service is one to...
View Answer

The idea of government failure includes all of the following except

Correct Answer
verified

Narrow, speciﬁcally designated expenditures that are included in more comprehensive legislation are known as

Correct Answer
verified

In the median-voter model, the median voter refers to the voter who makes her choice at the midpoint of the voting period.

Correct Answer
verified

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Correct Answer
verified

In thinking about the "principal-agent problem" in a democratic government, we assign the role of "principal" to the government.

Correct Answer
verified

Rent-seeking behavior in public choice theory refers to

Correct Answer
verified

Why would private business be considered more eﬃcient than public agencies?

Correct Answer
verified
Some economists contend that public agen...
View Answer

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

Which of the following is related to the special-interest effect?

Correct AnswerverifiedShow Answer

Logrolling can either increase or diminish economic eﬃciency.

Correct AnswerverifiedShow Answer

The major problem with paired-choice majority voting is that the outcome

Correct AnswerverifiedShow Answer

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state. From this we can deﬁnitively conclude

Correct AnswerverifiedShow Answer

Explain the paradox of voting.

Correct AnswerverifiedThe paradox of voting is a situation in ...View AnswerShow Answer

The ﬁeld of economics that analyzes government decision making, politics, and elections is called

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Deregulation

Correct AnswerverifiedShow Answer

Political corruption occurs whenever

Correct AnswerverifiedShow Answer

According to the paradox of voting,

Correct AnswerverifiedShow Answer

Regulatory capture in government happens because the people who are most qualiﬁed to supervise and regulate an industry oftentimes are or have been the leaders of the industry.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are quasi-public goods? Explain why quasi-public goods are often provided by government rather than private businesses.

Correct AnswerverifiedA quasi-public good or service is one to...View AnswerShow Answer

The idea of government failure includes all of the following except

Correct AnswerverifiedShow Answer

Narrow, speciﬁcally designated expenditures that are included in more comprehensive legislation are known as

Correct AnswerverifiedShow Answer

In the median-voter model, the median voter refers to the voter who makes her choice at the midpoint of the voting period.

Correct AnswerverifiedShow Answer

If one person's consumption of a good does not preclude another's consumption, the good is said to be

Correct AnswerverifiedShow Answer

In thinking about the "principal-agent problem" in a democratic government, we assign the role of "principal" to the government.

Correct AnswerverifiedShow Answer

Rent-seeking behavior in public choice theory refers to

Correct AnswerverifiedShow Answer

Why would private business be considered more eﬃcient than public agencies?

Correct AnswerverifiedSome economists contend that public agen...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The paradox of voting is a situation in ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A quasi-public good or service is one to...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
Some economists contend that public agen...
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