Question 1

A public good

Accepted Answer

A)   generally results in substantial negative externalities.
B)   can never be provided by a nongovernmental organization.
C)   costs essentially nothing to produce and is thus provided by the government at a zero price.
D)   can't be provided to one person without making it available to others as well.E) All of the above
F) C) and D)

Question 2

Because of the free-rider problem,

Accepted Answer

A)   the market demand for a public good is overstated.
B)   the market demand for a public good is nonexistent or understated.
C)   government has increasingly yielded to the private sector in producing public goods.
D)   public goods often create serious negative externalities.E) A) and C)
F) C) and D)

Question 3

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

Question 4

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 5

The free-rider problem refers to the local government's problem of ﬁnding funds to provide free bus rides in
the city.

Accepted Answer

A) True 
 B)False

Question 6

Esteban, Mariko, and Greta are the only three people in a community. Esteban is willing to pay $20 for the ﬁfth unit of a public good; Mariko, $15; and Greta, $25. Government should produce the ﬁfth unit of the public good
If the marginal cost is less than or equal to

Accepted Answer

A)   $25.
B)   $15.
C)   $60.
D)   $20.E) B) and C)
F) None of the above

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically
ineﬃcient.

Accepted Answer

A) True 
 B)False

Question 9

Economists widely support deregulation of industries that tend toward monopoly or generate substantial
negative externalities.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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) None of the above
F) B) and C)

Question 12

The median-voter model implies that a political oﬃce seeker will

Accepted Answer

A)   adopt more extreme views when seeking his or her party's nomination than when running against the other party's opponent.
B)   adopt less extreme views when seeking his or her party's nomination than when running against the other party's opponent.
C)   favor extensive government spending because demand curves for public goods are added vertically rather than horizontally.
D)   favor the private resolution of externality problems rather than governmental intervention.E) A) and B)
F) A) and C)

Question 13

List the ﬁve major sources of government failure.

Accepted Answer

The ﬁve major sources of gover...

Question 14

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Accepted Answer

A)   the median voter has the strongest preferences compared to the other voters.
B)   most voters strongly prefer the median view.
C)   extreme voters on either side of the median would prefer the median over the opposite extreme.
D)   voters' preferences are bell-shaped, with most of them falling on the median.E) B) and D)
F) A) and B)

Question 15

Factors that impede the attainment of economic eﬃciency in the public sector are called

Accepted Answer

A)   market failures.
B)   externalities.
C)   government failures.
D)   voting irregularities.E) B) and C)
F) All of the above

Question 16

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

Accepted Answer

Government failure refers to economicall...

Question 17

Deregulation can solve the problem of regulatory capture and increase economic eﬃciency

Accepted Answer

A)   if the deregulated industry quickly evolves into a monopoly.
B)   if the deregulated industry becomes more competitive.
C)   when the regulations covering the industry are tightened.
D)   when the industry ends up generating substantial external costs.E) A) and C)
F) A) and D)

Question 18

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 19

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

Question 20

Evaluate deregulation of an industry as an alternative to regulation.

Accepted Answer

Deregulating an industry, intentionally ...

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

The free-rider problem refers to the local government's problem of ﬁnding funds to provide free bus rides in the city.

Correct Answer
verified

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Correct Answer
verified

Esteban, Mariko, and Greta are the only three people in a community. Esteban is willing to pay $20 for the ﬁfth unit of a public good; Mariko, $15; and Greta, $25. Government should produce the ﬁfth unit of the public good If the marginal cost is less than or equal to

Correct Answer
verified

Factors that impede the attainment of economic eﬃciency in the public sector are called

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

Economists widely support deregulation of industries that tend toward monopoly or generate substantial negative externalities.

Correct Answer
verified

Correct Answer
verified

List the ﬁve major sources of government failure.

Correct Answer
verified
The ﬁve major sources of gover...
View Answer

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

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

Evaluate deregulation of an industry as an alternative to regulation.

Correct Answer
verified
Deregulating an industry, intentionally ...
View Answer

Deregulation can solve the problem of regulatory capture and increase economic eﬃciency

Correct Answer
verified

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

Correct Answer
verified

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically ineﬃcient.

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

The median-voter model implies that a political oﬃce seeker will

Correct Answer
verified

A public good

Correct Answer
verified

Because of the free-rider problem,

Correct Answer
verified

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

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

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

Correct Answer
verified

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

The free-rider problem refers to the local government's problem of ﬁnding funds to provide free bus rides in the city.

Correct AnswerverifiedShow Answer

The reason why, under majority voting and consistent voter preferences, the median voter's choice will tend to predominate is because

Correct AnswerverifiedShow Answer

Esteban, Mariko, and Greta are the only three people in a community. Esteban is willing to pay $20 for the ﬁfth unit of a public good; Mariko, $15; and Greta, $25. Government should produce the ﬁfth unit of the public good If the marginal cost is less than or equal to

Correct AnswerverifiedShow Answer

Factors that impede the attainment of economic eﬃciency in the public sector are called

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

Economists widely support deregulation of industries that tend toward monopoly or generate substantial negative externalities.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

List the ﬁve major sources of government failure.

Correct AnswerverifiedThe ﬁve major sources of gover...View AnswerShow Answer

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

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

Evaluate deregulation of an industry as an alternative to regulation.

Correct AnswerverifiedDeregulating an industry, intentionally ...View AnswerShow Answer

Deregulation can solve the problem of regulatory capture and increase economic eﬃciency

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Even if a majority of the population wants a law and the law is passed, the outcome may still be economically ineﬃcient.

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

The median-voter model implies that a political oﬃce seeker will

Correct AnswerverifiedShow Answer

A public good

Correct AnswerverifiedShow Answer

Because of the free-rider problem,

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

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
verified
The ﬁve major sources of gover...
View Answer

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

Correct Answer
verified
Deregulating an industry, intentionally ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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