Question 1

Most economists believe that the market __________ produce nonexcludable public goods because of the __________.

Accepted Answer

A)  will; monetary incentive they have to produce them
B)  will not; externality problem
C)  will not; free rider problem
D)  will; market shortage that often accompanies the production of public goods.
E)  none of the aboveF) All of the above
G) None of the above

Question 2

When a negative externality exists, _______________________ and thus _______________ intervention may be needed to achieve efficiency.

Accepted Answer

A)  external costs are necessarily greater than private costs; government
B)  social costs equal private costs; no government
C)  social costs are less than private costs; government
D)  social costs are greater than private costs; government
E)  none of the aboveF) A) and B)
G) A) and C)

Question 3

Exhibit 35-1
​
 
-Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen are currently in box 4, each receiving 10. they would like to move to box 1, where each receives 12. Without someone to ________________ their agreement, moving from box 4 is ______________________.

Accepted Answer

A)  enforce; likely
B)  enforce; unlikely
C)  break; unlikely
D)  break; likely
E)  There is not enough information to answer the question.F) A) and E)
G) C) and D)

Question 4

In the case of a negative externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.

Accepted Answer

A)  tax; external costs
B)  tax; external benefits
C)  subsidy; external costs
D)  subsidy; external benefits
E)  tax; private costsF) B) and C)
G) C) and D)

Question 5

Exhibit 35-1
​
 
-Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen have entered into an agreement and are currently in box 1. There is no enforcer to their agreement. Jaden and Karen are likely to

Accepted Answer

A)  remain in box 1.
B)  move to box 2, because this box is better for Jaden.
C)  move to box 3, because this box is better for Karen.
D)  move to box 4.
E)  There is not enough information to answer the question.F) A) and C)
G) A) and E)

Question 6

Given that the demand for unskilled labor curve is downward-sloping, an unintended effect of raising the minimum wage is that some people who worked at the lower wage will lose their jobs at the higher wage.

Accepted Answer

A) True 
 B)False

Question 7

Some people see the government as being more heavily involved in taking sides than in serving the common interest.

Accepted Answer

A) True 
 B)False

Question 8

In the case of a nonexcludable public good, the market will fail to produce the good because of the free rider problem.

Accepted Answer

A) True 
 B)False

Question 9

"I'm not going to pay for the good if, once produced, the good cannot be denied to anyone." This statement is most relevant to

Accepted Answer

A)  negative externalities.
B)  positive externalities
C)  private goods.
D)  nonexcludable public goods.
E)  the issue of rivalry versus nonrivalry in consumption.F) A) and B)
G) A) and C)

Question 10

Individuals want nonexcludable public good X, but the market does not provide it because of the free rider problem. Government overcomes the free rider problem by ______________ individuals and then either producing good X itself or paying someone to produce it.

Accepted Answer

A)  forcing individuals to work longer hours
B)  taxing
C)  surveying
D)  subsidizing
E)  none of the aboveF) A) and D)
G) All of the above

Question 11

Which of the following statements is false?

Accepted Answer

A)  Government can remove individuals from a prisoner's dilemma setting and make both participants better off.
B)  Government can define and enforce the property rights that individuals actually want defined and enforced.
C)  Individuals in a prisoner's dilemma setting may want to get out of the prisoner's dilemma setting.
D)  none of the aboveE) A) and C)
F) A) and D)

Question 12

Special interest group Z receives a 1/200th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $60,000. How much does the size of the economic pie (Real GDP)  need to grow before group Z is indifferent between the two policies?

Accepted Answer

A)  $300
B)  $120,000
C)  $120,000,000
D)  $12,000,000
E)  none of the aboveF) B) and E)
G) A) and E)

Question 13

When the government imposes a tariff on imported goods, it _____________ prices for domestic consumers, ________________ consumers' surplus and _________________ the producers' surplus for domestic producers.

Accepted Answer

A)  raises; lowers; raises
B)  lowers; raises; raises
C)  lowers; raises; lowers
D)  raises; lowers; lowers
E)  none of the aboveF) A) and E)
G) B) and D)

Question 14

A divisive society is one in which members of society work together for the common good.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following situations is used as a justification for government?

Accepted Answer

A)  negative externalities
B)  removal from the prisoner's dilemma
C)  nonexcludable goods
D)  positive externalities
E)  all of the aboveF) B) and C)
G) A) and D)

Question 16

In a divisive society the members of groups within the society see themselves as

Accepted Answer

A)  working in harmony with other groups in the society.
B)  equal to other groups within the society.
C)  pitted against other groups in the society.
D)  a and bE) A) and B)
F) None of the above

Question 17

If the government grants tax credits to first-time homebuyers, the supply of houses would increase and the price of housing would fall.

Accepted Answer

A) True 
 B)False

Question 18

A tax credit given to first-time home buyers would result in a _____________ shift in the ______________ curve for housing, which would lead to the unintended result of a(n)  _____________ in the price of housing.

Accepted Answer

A)  leftward; supply; increase
B)  leftward; demand; decrease
C)  rightward; supply; decrease
D)  rightward; demand; increase
E)  none of the aboveF) A) and D)
G) B) and D)

Question 19

Special interest group A receives a 1/10,000th slice of the economic pie (Real GDP) . It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be ________________ times larger than the _________________.

Accepted Answer

A)  1,000; transfer
B)  10,000; transfer
C)  100; transfer
D)  10,000; transfer minus $1,000
E)  1,000; transfer; minus $10,000F) A) and B)
G) A) and E)

Question 20

Which of the following statements is false?

Accepted Answer

A)  One of the intended effects of the health-care reform bills passed in March 2010 was for some people who had health insurance before the reform to choose to become uninsured after health-care reform.
B)  One of the provisions of the health-care reform bills passed in March 2010 is that individuals will be fined for not buying insurance.
C)  Among the provisions in the health-care reform bills passed in March 2010 is that insurance companies are prohibited from turning down a person with a preexisting disease.
D)  One of the objectives of the health-care reform bills passed in March 2010 was to bring more people into the pool of insured persons so that insurance policies would become cheaper.E) A) and B)
F) All of the above

Exam 35: The Economic Case for and Against Government Five Topics Considered

Some people see the government as being more heavily involved in taking sides than in serving the common interest.

Correct Answer
verified

In the case of a nonexcludable public good, the market will fail to produce the good because of the free rider problem.

Correct Answer
verified

Given that the demand for unskilled labor curve is downward-sloping, an unintended effect of raising the minimum wage is that some people who worked at the lower wage will lose their jobs at the higher wage.

Correct Answer
verified

A tax credit given to first-time home buyers would result in a _ shift in the curve for housing, which would lead to the unintended result of a(n) ___ in the price of housing.

Correct Answer
verified

If the government grants tax credits to first-time homebuyers, the supply of houses would increase and the price of housing would fall.

Correct Answer
verified

In a divisive society the members of groups within the society see themselves as

Correct Answer
verified

A divisive society is one in which members of society work together for the common good.

Correct Answer
verified

Which of the following statements is false?

Correct Answer
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Special interest group A receives a 1/10,000^th slice of the economic pie (Real GDP) . It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be times larger than the _.

Correct Answer
verified

Which of the following situations is used as a justification for government?

Correct Answer
verified

In the case of a negative externality, in order to achieve efficiency the government must set the _ equal to the marginal ____.

Correct Answer
verified

Special interest group Z receives a 1/200^th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $60,000. How much does the size of the economic pie (Real GDP) need to grow before group Z is indifferent between the two policies?

Correct Answer
verified

When the government imposes a tariff on imported goods, it _ prices for domestic consumers, consumers' surplus and _____ the producers' surplus for domestic producers.

Correct Answer
verified

When a negative externality exists, _________ and thus _ intervention may be needed to achieve efficiency.

Correct Answer
verified

Most economists believe that the market produce nonexcludable public goods because of the .

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

"I'm not going to pay for the good if, once produced, the good cannot be denied to anyone." This statement is most relevant to

Correct Answer
verified

Correct Answer
verified

Individuals want nonexcludable public good X, but the market does not provide it because of the free rider problem. Government overcomes the free rider problem by ______________ individuals and then either producing good X itself or paying someone to produce it.

Correct Answer
verified

Exhibit 35-1 -Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen have entered into an agreement and are currently in box 1. There is no enforcer to their agreement. Jaden and Karen are likely to

Correct Answer
verified

Exam 35: The Economic Case for and Against Government Five Topics Considered

Some people see the government as being more heavily involved in taking sides than in serving the common interest.

Correct AnswerverifiedShow Answer

In the case of a nonexcludable public good, the market will fail to produce the good because of the free rider problem.

Correct AnswerverifiedShow Answer

Given that the demand for unskilled labor curve is downward-sloping, an unintended effect of raising the minimum wage is that some people who worked at the lower wage will lose their jobs at the higher wage.

Correct AnswerverifiedShow Answer

A tax credit given to first-time home buyers would result in a _____________ shift in the ______________ curve for housing, which would lead to the unintended result of a(n) _____________ in the price of housing.

Correct AnswerverifiedShow Answer

If the government grants tax credits to first-time homebuyers, the supply of houses would increase and the price of housing would fall.

Correct AnswerverifiedShow Answer

In a divisive society the members of groups within the society see themselves as

Correct AnswerverifiedShow Answer

A divisive society is one in which members of society work together for the common good.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Special interest group A receives a 1/10,000th slice of the economic pie (Real GDP) . It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be ________________ times larger than the _________________.

Correct AnswerverifiedShow Answer

Which of the following situations is used as a justification for government?

Correct AnswerverifiedShow Answer

In the case of a negative externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.

Correct AnswerverifiedShow Answer

Special interest group Z receives a 1/200th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $60,000. How much does the size of the economic pie (Real GDP) need to grow before group Z is indifferent between the two policies?

Correct AnswerverifiedShow Answer

When the government imposes a tariff on imported goods, it _____________ prices for domestic consumers, ________________ consumers' surplus and _________________ the producers' surplus for domestic producers.

Correct AnswerverifiedShow Answer

When a negative externality exists, _______________________ and thus _______________ intervention may be needed to achieve efficiency.

Correct AnswerverifiedShow Answer

Most economists believe that the market __________ produce nonexcludable public goods because of the __________.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

"I'm not going to pay for the good if, once produced, the good cannot be denied to anyone." This statement is most relevant to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Individuals want nonexcludable public good X, but the market does not provide it because of the free rider problem. Government overcomes the free rider problem by ______________ individuals and then either producing good X itself or paying someone to produce it.

Correct AnswerverifiedShow Answer

Exhibit 35-1 ​ -Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen have entered into an agreement and are currently in box 1. There is no enforcer to their agreement. Jaden and Karen are likely to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A tax credit given to first-time home buyers would result in a _ shift in the curve for housing, which would lead to the unintended result of a(n) ___ in the price of housing.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Special interest group A receives a 1/10,000^th slice of the economic pie (Real GDP) . It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be times larger than the _.

Correct Answer
verified

Correct Answer
verified

In the case of a negative externality, in order to achieve efficiency the government must set the _ equal to the marginal ____.

Correct Answer
verified

Special interest group Z receives a 1/200^th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $60,000. How much does the size of the economic pie (Real GDP) need to grow before group Z is indifferent between the two policies?

Correct Answer
verified

When the government imposes a tariff on imported goods, it _ prices for domestic consumers, consumers' surplus and _____ the producers' surplus for domestic producers.

Correct Answer
verified

When a negative externality exists, _________ and thus _ intervention may be needed to achieve efficiency.

Correct Answer
verified

Most economists believe that the market produce nonexcludable public goods because of the .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exhibit 35-1 -Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen have entered into an agreement and are currently in box 1. There is no enforcer to their agreement. Jaden and Karen are likely to

Correct Answer
verified