Question 1

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 as between the two.
D)  no voter decision is possible.E) A) and B)
F) A) and C)

Question 2

The government's ability to coerce, ensures that what does not occur:

Accepted Answer

A)  Market's will be in equilibrium
B)  Blackmail
C)  Extortion
D)  Private coercionE) A) and B)
F) None of the above

Question 3

The political technique called logrolling:

Accepted Answer

A)  always increases economic efficiency.
B)  always decreases economic efficiency.
C)  involves trading votes to secure favorable outcomes that otherwise could be rejected.
D)  is an example of the paradox of voting.E) B) and C)
F) A) and D)

Question 4

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the:

Accepted Answer

A)  paradox of voting.
B)  concept of logrolling.
C)  median-voter model.
D)  Coase theorem.E) C) and D)
F) A) and D)

Question 5

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 C)
F) None of the above

Question 6

Which of the following will tend to socialize losses and privatize gains?

Accepted Answer

A)  Lowering interest rates to encourage private borrowing and investment.
B)  Government regulation to promote human safety and environmental protection.
C)  Government creating projects rather than supporting private efforts.
D)  Government guarantees to private investors that they will get their money back even if the company fails.E) A) and D)
F) A) and B)

Question 7

Which one of the following topics would be of the most interest to a public choice economist?

Accepted Answer

A)  The theory of comparative advantage.
B)  The law of increasing opportunity cost.
C)  Inflation and unemployment.
D)  Rent-seeking behavior.E) C) and D)
F) A) and B)

Question 8

Government's ability to enforce laws and contracts increases private-sector economic risks.

Accepted Answer

A) True 
 B)False

Question 9

Information problems create inefficient outcomes in:

Accepted Answer

A)  the private sector but not the public sector.
B)  the public sector but not the private sector.
C)  neither the private nor the public sector.
D)  both the private and the public sectors.E) A) and B)
F) All of the above

Question 10

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed.  If the tax cost of this proposed project is $300 per person, a majority vote will:

Accepted Answer

A)  defeat this project and resources will be underallocated to it.
B)  pass this project and resources will be allocated efficiently.
C)  pass this project and resources will be underallocated to it.
D)  defeat this project and resources will be overallocated to it.E) None of the above
F) All of the above

Question 11

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 D)
F) A) and D)

Question 12

Under what circumstances would government loan guarantees be socially beneficial?

Accepted Answer

A)  When the guarantees socialize losses and privatize gains.
B)  When the guarantees stimulate production of goods generating significant spillover costs.
C)  When the guarantees promote production of goods otherwise underproduced by the private sector.
D)  When the guarantees increase company profits.E) B) and C)
F) A) and D)

Question 13

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 14

In what way, if any, does the invisible hand affect government resource allocation?

Accepted Answer

A)  It enhances government efficiency by promoting competition for resources within government.
B)  It does not help resource allocation, as there are no competitive forces within government that automatically direct resources to their best uses.
C)  It rewards government bureaucrats who are most efficient at implementing public policies.
D)  It reduces government efficiency by sending market signals that interfere with government decision making.E) C) and D)
F) A) and B)

Question 15

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude:

Accepted Answer

A)  that political corruption has occurred.
B)  that logrolling has occurred.
C)  that a principal-agent problem has occurred.
D)  nothing; the Road Runner Club may have donated to Senator Sly because he already supported the jogging paths.E) A) and D)
F) B) and C)

Question 16

In representative democracy, voters are ____________ and politicians are ______________.

Accepted Answer

A)  agents; principals
B)  logrollers; principals
C)  agents; employees
D)  principals; agentsE) A) and B)
F) None of the above

Question 17

Vote for my special local project and I will vote for yours.This political technique:

Accepted Answer

A)  illustrates the paradox of voting.
B)  is called "logrolling."
C)  illustrates the median voter model.
D)  undermines the benefits-received principle.E) C) and D)
F) B) and D)

Question 18

Suppose Canadian winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions.This would be an example of:

Accepted Answer

A)  moral hazard.
B)  the principal-agent problem.
C)  logrolling.
D)  rent-seeking behavior.E) C) and D)
F) All of the above

Question 19

Suppose a college economics department decides to use a single economics text for all sections of principles of economics.Also assume that the three individual members of the textbook selection committee have the following preferences.  Assuming all other textbook qualities except analytical level are the same, paired-choice majority voting will result in the committee:

Accepted Answer

A)  being deadlocked and unable to decide on a book.
B)  selecting the C/F book.
C)  selecting the M/B book.
D)  selecting the O/S book.E) None of the above
F) A) and C)

Question 20

The government of Southland wants to improve resource allocation in the country.Which of the following actions by the Southland government is most likely to accomplish this?

Accepted Answer

A)  Weakening enforcement of laws and contracts.
B)  Promising to cover every risk of loss for private firms.
C)  Coercing all firms to innovate and invest.
D)  Taxing polluters and subsidizing firms that are creating significant positive externalities.E) All of the above
F) None of the above

Exam 5: B: Governments Role and Government Failure

Government's ability to enforce laws and contracts increases private-sector economic risks.

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

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

Correct Answer
verified

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude:

Correct Answer
verified

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the:

Correct Answer
verified

Under what circumstances would government loan guarantees be socially beneficial?

Correct Answer
verified

Correct Answer
verified

The political technique called logrolling:

Correct Answer
verified

Information problems create inefficient outcomes in:

Correct Answer
verified

The government's ability to coerce, ensures that what does not occur:

Correct Answer
verified

In what way, if any, does the invisible hand affect government resource allocation?

Correct Answer
verified

Suppose Canadian winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions.This would be an example of:

Correct Answer
verified

Which of the following will tend to socialize losses and privatize gains?

Correct Answer
verified

In representative democracy, voters are and politicians are __.

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

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

Correct Answer
verified

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed. If the tax cost of this proposed project is $300 per person, a majority vote will:

Correct Answer
verified

The government of Southland wants to improve resource allocation in the country.Which of the following actions by the Southland government is most likely to accomplish this?

Correct Answer
verified

Which one of the following topics would be of the most interest to a public choice economist?

Correct Answer
verified

Vote for my special local project and I will vote for yours.This political technique:

Correct Answer
verified

Exam 5: B: Governments Role and Government Failure

Government's ability to enforce laws and contracts increases private-sector economic risks.

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

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

Correct AnswerverifiedShow Answer

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude:

Correct AnswerverifiedShow Answer

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the:

Correct AnswerverifiedShow Answer

Under what circumstances would government loan guarantees be socially beneficial?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The political technique called logrolling:

Correct AnswerverifiedShow Answer

Information problems create inefficient outcomes in:

Correct AnswerverifiedShow Answer

The government's ability to coerce, ensures that what does not occur:

Correct AnswerverifiedShow Answer

In what way, if any, does the invisible hand affect government resource allocation?

Correct AnswerverifiedShow Answer

Suppose Canadian winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions.This would be an example of:

Correct AnswerverifiedShow Answer

Which of the following will tend to socialize losses and privatize gains?

Correct AnswerverifiedShow Answer

In representative democracy, voters are ____________ and politicians are ______________.

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

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

Correct AnswerverifiedShow Answer

Answer the question on the basis of this table showing the marginal benefit that a particular public project will provide to each of the three members of a community.No vote trading is allowed. If the tax cost of this proposed project is $300 per person, a majority vote will:

Correct AnswerverifiedShow Answer

The government of Southland wants to improve resource allocation in the country.Which of the following actions by the Southland government is most likely to accomplish this?

Correct AnswerverifiedShow Answer

Which one of the following topics would be of the most interest to a public choice economist?

Correct AnswerverifiedShow Answer

Vote for my special local project and I will vote for yours.This political technique:

Correct AnswerverifiedShow Answer

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In representative democracy, voters are and politicians are __.

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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