Question 1

Inefficiencies associated with majority voting may get resolved through

Accepted Answer

A)  using the median-voter model.
B)  bureaucratic inefficiency.
C)  the paradox of voting.
D)  political logrolling.E) A) and C)
F) B) and C)

Question 2

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 D)
F) None of the above

Question 3

In a sporting goods store, you can buy the equipment you want and forgo the rest. But in an election you "buy" the entire range of the candidate's positions, including some you may not agree with. This difference

Accepted Answer

A)  reflects limited and bundled choices in the public sector.
B)  describes the paradox of voting.
C)  describes the principal-agent problem in the public sector.
D)  creates bureaucratic inefficiency in the public sector.E) A) and C)
F) A) and B)

Question 4

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 5

Assume that Matt, Joe, and Teresa 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 $380 for Matt, $360 for Joe, and $200 for Teresa. 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) B) and C)

Question 6

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $800. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majority vote, this proposal will most likely be

Accepted Answer

A)  accepted, four in favor, one against.
B)  accepted, 3 in favor, 2 against.
C)  accepted, all 5 in favor.
D)  defeated, 1 in favor, 4 against.E) C) and D)
F) B) and D)

Question 7

Which of the following statements is not true?

Accepted Answer

A)  Some public goods are paid for by private philanthropy.
B)  Private provision of public goods is usually unprofitable.
C)  The free-rider problem results from the characteristics of nonrivalry and nonexcludability.
D)  Public goods are only provided by government.E) A) and D)
F) None of the above

Question 8

"Pork-barrel" legislation that contains funding for hundreds of earmarks throughout numerous states often reflects

Accepted Answer

A)  the paradox of voting.
B)  logrolling.
C)  the benefits-received principle.
D)  adverse selection.E) None of the above
F) B) and C)

Question 9

The paradox of voting is that under majority voting rules, the median voter decides the election outcome.

Accepted Answer

A) True 
 B)False

Question 10

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for

Accepted Answer

A)  airlines.
B)  pharmaceuticals.
C)  railroads.
D)  interstate trucking.E) A) and B)
F) A) and C)

Question 11

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)  $72,000 and $64,000, respectively.
B)  $28,000 and $12,000, respectively.
C)  $24,000 and $18,000, respectively.
D)  $16,000 and $28,000, respectively.E) All of the above
F) A) and C)

Question 12

Regulatory capture occurs when government exerts excessive control over an industry.

Accepted Answer

A) True 
 B)False

Question 13

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars.  Applying the median-voter model and assuming that there are equal numbers of voters supporting each stadium, we would expect

Accepted Answer

A)  stadium C to be built, which would be the most socially efficient outcome.
B)  stadium C to be built, but this would not be the most socially efficient outcome.
C)  stadium D to be built because it produces the most socially efficient outcome.
D)  no stadium to be built, because of political gridlock.E) B) and D)
F) A) and D)

Question 14

At the optimal quantity of a public good,

Accepted Answer

A)  marginal benefit exceeds marginal cost by the greatest amount.
B)  total benefit equals total cost.
C)  marginal benefit equals marginal cost.
D)  marginal benefit is zero.E) C) and D)
F) A) and C)

Question 15

According to the marginal-cost-marginal-benefit rule,

Accepted Answer

A)  only government projects (as opposed to private projects) should be assessed by comparing marginal costs and marginal benefits.
B)  the optimal project size is the one for which MB = MC.
C)  the optimal project size is the one for which MB exceeds MC by the greatest amount.
D)  project managers should attempt to minimize both MB and MC.E) B) and D)
F) A) and D)

Question 16

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the

Accepted Answer

A)  paradox of voting.
B)  median-voter model.
C)  law of diminishing marginal utility.
D)  ability-to-pay principle.E) B) and D)
F) A) and B)

Question 17

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills, trusts, and other legal documents. This is an example of

Accepted Answer

A)  logrolling.
B)  the principal-agent problem.
C)  rent-seeking behavior.
D)  limited and bundled choices.E) A) and B)
F) A) and C)

Question 18

1 units of the public good are produced, then A) users are willing to pay more for the public good than it costs to produce it. B) users are willing to pay less for the public good than it costs to produce it. C) there is an overallocation of resources toward producing this public good. D) allocative efficiency is achieved in the market." class="answers-bank-image d-inline" rel="preload" > Refer to the provided supply and demand graph for a public good. If Q1 units of the public good are produced, then

Accepted Answer

A)  users are willing to pay more for the public good than it costs to produce it.
B)  users are willing to pay less for the public good than it costs to produce it.
C)  there is an overallocation of resources toward producing this public good.
D)  allocative efficiency is achieved in the market.E) B) and C)
F) A) and B)

Question 19

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Accepted Answer

A) True 
 B)False

Question 20

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

Accepted Answer

A)  median-voter trading.
B)  the special-interest effect.
C)  political logrolling.
D)  the paradox of voting.E) C) and D)
F) B) and C)

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

In a sporting goods store, you can buy the equipment you want and forgo the rest. But in an election you "buy" the entire range of the candidate's positions, including some you may not agree with. This difference

Correct Answer
verified

Regulatory capture occurs when government exerts excessive control over an industry.

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

"Pork-barrel" legislation that contains funding for hundreds of earmarks throughout numerous states often reflects

Correct Answer
verified

According to the marginal-cost-marginal-benefit rule,

Correct Answer
verified

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

Correct Answer
verified

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for

Correct Answer
verified

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the

Correct Answer
verified

Correct Answer
verified

At the optimal quantity of a public good,

Correct Answer
verified

The paradox of voting is that under majority voting rules, the median voter decides the election outcome.

Correct Answer
verified

Correct Answer
verified

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills, trusts, and other legal documents. This is an example of

Correct Answer
verified

Correct Answer
verified

Inefficiencies associated with majority voting may get resolved through

Correct Answer
verified

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Correct Answer
verified

Refer to the provided supply and demand graph for a public good. If Q₁ units of the public good are produced, then

Correct Answer
verified

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

Correct Answer
verified

Which of the following statements is not true?

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

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

In a sporting goods store, you can buy the equipment you want and forgo the rest. But in an election you "buy" the entire range of the candidate's positions, including some you may not agree with. This difference

Correct AnswerverifiedShow Answer

Regulatory capture occurs when government exerts excessive control over an industry.

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

"Pork-barrel" legislation that contains funding for hundreds of earmarks throughout numerous states often reflects

Correct AnswerverifiedShow Answer

According to the marginal-cost-marginal-benefit rule,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for

Correct AnswerverifiedShow Answer

Some people argue that the three main television networks all have similar programming. If true, this observation might best be explained by the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At the optimal quantity of a public good,

Correct AnswerverifiedShow Answer

The paradox of voting is that under majority voting rules, the median voter decides the election outcome.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills, trusts, and other legal documents. This is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Inefficiencies associated with majority voting may get resolved through

Correct AnswerverifiedShow Answer

The "principal-agent problem" often arises in public choice when politicians pursue the best interests of their constituents.

Correct AnswerverifiedShow Answer

Refer to the provided supply and demand graph for a public good. If Q1 units of the public good are produced, then

Correct AnswerverifiedShow Answer

The trading of votes to secure favorable outcomes on decisions that would otherwise be defeated is called

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the provided supply and demand graph for a public good. If Q₁ units of the public good are produced, then

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified