Question 1

When the special-interest effect is the major reason for the passage of a government policy or project, then economic efficiency will always improve.

Accepted Answer

A) True 
 B)False

Question 2

As voters "vote with their feet" and move to political districts where the median voter's preference is closer to their own, the median voter's preference will

Accepted Answer

A)  strengthen.
B)  weaken.
C)  shift.
D)  stagnate.E) A) and B)
F) All of the above

Question 3

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.Topic: Government Failure

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Refer to the table.The outcomes of the three possible sets of paired-choice majority votes illustrate the

Accepted Answer

A)  paradox of voting.
B)  inefficiency of logrolling.
C)  principal-agent problem.
D)  the benefits of majority rule.E) B) and C)
F) A) and B)

Question 6

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) A) and D)

Question 7

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 B)
F) A) and D)

Question 8

Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters.

Accepted Answer

A) True 
 B)False

Question 9

The government's ability to coerce can enhance economic efficiency by

Accepted Answer

A)  eliminating income inequality.
B)  correcting market failures.
C)  preventing resources from going to their most valued uses.
D)  restraining self-interest.E) All of the above
F) C) and D)

Question 10

Which of the following would best explain why regulatory capture is a problem?

Accepted Answer

A)  The regulations implemented tend to reduce the profitability of the regulated industry and reduce global competitiveness.
B)  Regulatory capture unduly increases the size and power of government, increasing costs for taxpayers.
C)  Individuals implementing the regulations lack expertise about the industry and therefore make poor regulatory choices.
D)  The regulations implemented serve the private interests of the regulated industry, rather than addressing social interests such as consumer safety and environmental protection.E) A) and B)
F) All of the above

Question 11

Refer to the table.In a choice between the highway and the lighthouse,

Accepted Answer

A)  a majority of voters favor the lighthouse.
B)  a majority of voters favor the highway.
C)  the voters are indifferent between the two.
D)  no voter decision is possible.E) A) and B)
F) B) and C)

Question 12

One key difference between government activities and private transactions is that

Accepted Answer

A)  government can enforce involuntary transactions, whereas private transactions are mostly voluntary.
B)  government can produce only services, whereas private producers can produce both goods and services.
C)  government does not run any production operations, whereas private firms have the main purpose of running production operations.
D)  government does not earn revenues from its activities, whereas private firms aim to earn revenues and profits.E) A) and B)
F) A) and C)

Question 13

The term government failure refers to the

Accepted Answer

A)  large losses suffered by publicly owned water, gas, and electric companies.
B)  large number of bankruptcies that have occurred recently among local governments.
C)  economically inefficient outcomes caused by voting problems or incentive structures in government.
D)  inability of government agencies to provide adequate police protection in low-income neighborhoods.E) B) and C)
F) A) and B)

Question 14

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza, Godfather contends a large pizza will be needed, and Little Caesar wants a super-large pizza.Assuming no paradox of voting, majority voting will result in a decision to order

Accepted Answer

A)  a medium pizza.
B)  a large pizza.
C)  a super-large pizza.
D)  two medium pizzas.E) A) and B)
F) None of the above

Question 15

Because of the so-called "bundled choice" problem, voters often vote for candidates that they are not entirely happy with.

Accepted Answer

A) True 
 B)False

Question 16

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) C) and D)
F) B) and D)

Question 17

The public (or national)  debt refers to the

Accepted Answer

A)  same thing as a budget deficit.
B)  deadweight loss in a market.
C)  accumulation of all past budget deficits.
D)  sum of all the debts of households and businesses.E) B) and D)
F) None of the above

Question 18

(Consider This)  From an economist's perspective,

Accepted Answer

A)  small government is better than big government.
B)  big government is better than small government.
C)  regardless of size, government is incapable of achieving allocative or productive efficiency.
D)  the size of government doesn't matter, as long as spending occurs up to where MB = MC.E) A) and B)
F) A) and D)

Question 19

The size and scope of government inhibit the flow of information to decision makers, leading to inefficient outcomes.

Accepted Answer

A) True 
 B)False

Question 20

(Consider This)  Which of the following is an example of voter failure?

Accepted Answer

A)  Voters support adding stoplights that would increase congestion and travel costs without increasing safety or convenience.
B)  Government officials ignore voter calls for regulations that would reduce negative externalities and enhance efficiency.
C)  Voters wanting greater highway safety are unable to express their preferences on how to achieve it because the voting system doesn't allow it.
D)  Voters wanting more government services are divided on what services they most prefer, leaving government officials to determine what is best.E) A) and C)
F) A) and D)

Exam 5: Governments Role and Government Failure

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza, Godfather contends a large pizza will be needed, and Little Caesar wants a super-large pizza.Assuming no paradox of voting, majority voting will result in a decision to order

Correct Answer
verified

Which of the following would best explain why regulatory capture is a problem?

Correct Answer
verified

The size and scope of government inhibit the flow of information to decision makers, leading to inefficient outcomes.

Correct Answer
verified

(Consider This) From an economist's perspective,

Correct Answer
verified

As voters "vote with their feet" and move to political districts where the median voter's preference is closer to their own, the median voter's preference will

Correct Answer
verified

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

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

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.Topic: Government Failure

Correct Answer
verified

One key difference between government activities and private transactions is that

Correct Answer
verified

The term government failure refers to the

Correct Answer
verified

Refer to the table.The outcomes of the three possible sets of paired-choice majority votes illustrate the

Correct Answer
verified

(Consider This) Which of the following is an example of voter failure?

Correct Answer
verified

Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters.

Correct Answer
verified

When the special-interest effect is the major reason for the passage of a government policy or project, then economic efficiency will always improve.

Correct Answer
verified

The public (or national) debt refers to the

Correct Answer
verified

Because of the so-called "bundled choice" problem, voters often vote for candidates that they are not entirely happy with.

Correct Answer
verified

The government's ability to coerce can enhance economic efficiency by

Correct Answer
verified

Refer to the table.In a choice between the highway and the lighthouse,

Correct Answer
verified

Correct Answer
verified

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

Exam 5: Governments Role and Government Failure

Suppose three roommates cannot agree on the size of a pizza to order.Domino argues for a medium pizza, Godfather contends a large pizza will be needed, and Little Caesar wants a super-large pizza.Assuming no paradox of voting, majority voting will result in a decision to order

Correct AnswerverifiedShow Answer

Which of the following would best explain why regulatory capture is a problem?

Correct AnswerverifiedShow Answer

The size and scope of government inhibit the flow of information to decision makers, leading to inefficient outcomes.

Correct AnswerverifiedShow Answer

(Consider This) From an economist's perspective,

Correct AnswerverifiedShow Answer

As voters "vote with their feet" and move to political districts where the median voter's preference is closer to their own, the median voter's preference will

Correct AnswerverifiedShow Answer

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

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

It is generally believed that, because of the election process, the incentives and pressures for internal efficiency are stronger in the public sector than in the private sector.Topic: Government Failure

Correct AnswerverifiedShow Answer

One key difference between government activities and private transactions is that

Correct AnswerverifiedShow Answer

The term government failure refers to the

Correct AnswerverifiedShow Answer

Refer to the table.The outcomes of the three possible sets of paired-choice majority votes illustrate the

Correct AnswerverifiedShow Answer

(Consider This) Which of the following is an example of voter failure?

Correct AnswerverifiedShow Answer

Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters.

Correct AnswerverifiedShow Answer

When the special-interest effect is the major reason for the passage of a government policy or project, then economic efficiency will always improve.

Correct AnswerverifiedShow Answer

The public (or national) debt refers to the

Correct AnswerverifiedShow Answer

Because of the so-called "bundled choice" problem, voters often vote for candidates that they are not entirely happy with.

Correct AnswerverifiedShow Answer

The government's ability to coerce can enhance economic efficiency by

Correct AnswerverifiedShow Answer

Refer to the table.In a choice between the highway and the lighthouse,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow 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

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