Question 1

The free-rider problem makes a good highly profitable for a private firm to provide.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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. In a majority vote, this proposal will most likely be

Accepted Answer

A)  accepted; the public good is produced, even though it is economically inefficient.
B)  defeated; the public good is not produced, even though it would have been efficient to do so.
C)  accepted; the public good is produced, which is economically efficient.
D)  defeated; the public good is not produced, which is the proper outcome.E) A) and B)
F) A) and C)

Question 4

Answer the question based on the following information for a public good. Pₐ and Pᵦ are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society.  If this good were a private good instead of a public one, the total quantity demanded at a $3 market price would be

Accepted Answer

A)  2 units.
B)  3 units.
C)  6 units.
D)  4 units.E) A) and B)
F) A) and C)

Question 5

Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called

Accepted Answer

A)  nonrivalry.
B)  nonexcludability.
C)  nontaxability.
D)  nondiscrimination.E) None of the above
F) A) and D)

Question 6

Street entertainers face the free-rider problem when they perform because of the

Accepted Answer

A)  law of demand.
B)  diminishing marginal utility.
C)  nonexcludability characteristic.
D)  rivalry characteristic.E) B) and C)
F) A) and D)

Question 7

What is meant by the term government failure as described in this chapter?

Accepted Answer

Government failure refers to economicall...

Question 8

Government loan subsidies for mohair production illustrate

Accepted Answer

A)  why special-interest effects are often characterized by concentrated benefits and diffuse costs.
B)  why special-interest effects are often characterized by concentrated costs and diffuse benefits.
C)  that larger groups carry greater political weight than smaller groups.
D)  the moral hazard problem.E) B) and D)
F) C) and D)

Question 9

It is observed that the person representing the middle position on an issue will most likely determine the outcome of an election. This view is most closely associated with the

Accepted Answer

A)  fallacy of limited decisions.
B)  special-interest effect.
C)  paradox of voting.
D)  median-voter model.E) C) and D)
F) None of the above

Question 10

Economists (particularly public choice theorists) point out that the political process

Accepted Answer

A)  differs from the marketplace in that voters and congressional representatives often face limited and bundled choices.
B)  is less prone to failure than is the marketplace.
C)  is a much fairer way to allocate society's scarce resources than is the impersonal marketplace, which is dominated by high-income consumers.
D)  involves logrolling, which is always inefficient.E) A) and C)
F) B) and C)

Question 11

In the median-voter model, half the voters have stronger or more positive preferences than the median voter, while half of the voters have weaker or more negative preferences.

Accepted Answer

A) True 
 B)False

Question 12

Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.

Accepted Answer

A) True 
 B)False

Question 13

The situation where "the few who yell the loudest get heard" is referred to as the

Accepted Answer

A)  special-interest effect.
B)  principal-agent problem.
C)  moral hazard problem.
D)  adverse selection effect.E) C) and D)
F) All of the above

Question 14

The information contained in the table illustrates

Accepted Answer

A)  political logrolling.
B)  the median-voter model.
C)  the paradox of voting.
D)  the principal-agent problem theorem.E) All of the above
F) A) and B)

Question 15

The following data are for a series of increasingly extensive flood-control projects.  On the basis of cost-benefit analysis, government should undertake

Accepted Answer

A)  Plan D.
B)  Plan C.
C)  Plan B.
D)  Plan A.E) A) and D)
F) A) and C)

Question 16

Economists call the pursuit of extra profit or income by influencing government policies,

Accepted Answer

A)  the paradox of voting.
B)  adverse selection.
C)  rent-seeking behavior.
D)  the benefits-received principle.E) All of the above
F) B) and D)

Question 17

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) A) and D)
F) A) and B)

Question 18

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) A) and B)
F) A) and C)

Question 19

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.  Based on cost-benefit analysis, New Normal University should undertake Level

Accepted Answer

A)  Two.
B)  Three.
C)  Four.
D)  Five.E) B) and C)
F) A) and B)

Question 20

Special-interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences and could thereby lead to efficient outcomes.

Accepted Answer

A) True 
 B)False

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

Rent-seeking behavior in public choice theory refers to

Correct Answer
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Correct Answer
verified

It is observed that the person representing the middle position on an issue will most likely determine the outcome of an election. This view is most closely associated with the

Correct Answer
verified

Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.

Correct Answer
verified

Economists call the pursuit of extra profit or income by influencing government policies,

Correct Answer
verified

The free-rider problem makes a good highly profitable for a private firm to provide.

Correct Answer
verified

Special-interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences and could thereby lead to efficient outcomes.

Correct Answer
verified

What is meant by the term government failure as described in this chapter?

Correct Answer
verified
Government failure refers to economicall...
View Answer

The information contained in the table illustrates

Correct Answer
verified

In the median-voter model, half the voters have stronger or more positive preferences than the median voter, while half of the voters have weaker or more negative preferences.

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

Street entertainers face the free-rider problem when they perform because of the

Correct Answer
verified

Correct Answer
verified

Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called

Correct Answer
verified

Deregulation

Correct Answer
verified

Economists (particularly public choice theorists) point out that the political process

Correct Answer
verified

The following data are for a series of increasingly extensive flood-control projects. On the basis of cost-benefit analysis, government should undertake

Correct Answer
verified

The situation where "the few who yell the loudest get heard" is referred to as the

Correct Answer
verified

Correct Answer
verified

Government loan subsidies for mohair production illustrate

Correct Answer
verified

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

Rent-seeking behavior in public choice theory refers to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

It is observed that the person representing the middle position on an issue will most likely determine the outcome of an election. This view is most closely associated with the

Correct AnswerverifiedShow Answer

Political logrolling, or vote trading, can turn a potentially inefficient voting outcome into an efficient one.

Correct AnswerverifiedShow Answer

Economists call the pursuit of extra profit or income by influencing government policies,

Correct AnswerverifiedShow Answer

The free-rider problem makes a good highly profitable for a private firm to provide.

Correct AnswerverifiedShow Answer

Special-interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences and could thereby lead to efficient outcomes.

Correct AnswerverifiedShow Answer

What is meant by the term government failure as described in this chapter?

Correct AnswerverifiedGovernment failure refers to economicall...View AnswerShow Answer

The information contained in the table illustrates

Correct AnswerverifiedShow Answer

In the median-voter model, half the voters have stronger or more positive preferences than the median voter, while half of the voters have weaker or more negative preferences.

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

Street entertainers face the free-rider problem when they perform because of the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called

Correct AnswerverifiedShow Answer

Deregulation

Correct AnswerverifiedShow Answer

Economists (particularly public choice theorists) point out that the political process

Correct AnswerverifiedShow Answer

The following data are for a series of increasingly extensive flood-control projects. On the basis of cost-benefit analysis, government should undertake

Correct AnswerverifiedShow Answer

The situation where "the few who yell the loudest get heard" is referred to as the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Government loan subsidies for mohair production illustrate

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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Government failure refers to economicall...
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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Correct Answer
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