Question 1

To the extent that special-interest groups engage in rent seeking, they

Accepted Answer

A) are guilty of tax evasion 
B) tend to make the economy more efficient 
C) support legislation transferring wealth to themselves only if the measure increases the economy's overall efficiency 
D) shift resources from endeavors that create income to activities that simply transfer income 
E) tend to increase the economy's total output of goods and services while redistributing income 
A) are guilty of tax evasion 
B) tend to make the economy more efficient 
C) support legislation transferring wealth to themselves only if the measure increases the economy's overall efficiency 
D) shift resources from endeavors that create income to activities that simply transfer income 
E) tend to increase the economy's total output of goods and services while redistributing income

Question 2

iIf a voter expects to have little effect on government choices, that voter's behavior will reflect

Accepted Answer

A) rational ignorance 
B) a cyclical majority 
C) rent seeking 
D) vote trading 
E) a zero-sum game 
A) rational ignorance 
B) a cyclical majority 
C) rent seeking 
D) vote trading 
E) a zero-sum game

Question 3

Competing-interest legislation is legislation that

Accepted Answer

A) imposes benefits on only a few individuals but imposes costs on many people 
B) imposes both benefits and costs on relatively few individuals 
C) imposes benefits on many individuals but imposes the costs on relatively few people 
D) imposes both benefits and costs on many individuals 
E) imposes costs only on those individuals who are rationally ignorant 
A) imposes benefits on only a few individuals but imposes costs on many people 
B) imposes both benefits and costs on relatively few individuals 
C) imposes benefits on many individuals but imposes the costs on relatively few people 
D) imposes both benefits and costs on many individuals 
E) imposes costs only on those individuals who are rationally ignorant

Question 4

Agricultural subsidies in the United States are paid for by

Accepted Answer

A) consumers of the product 
B) taxpayers and consumers 
C) other industries 
D) special taxes 
E) import tariffs 
A) consumers of the product 
B) taxpayers and consumers 
C) other industries 
D) special taxes 
E) import tariffs

Question 5

The term underground economy refers to

Accepted Answer

A) the coal-mining industry 
B) all ore mining 
C) the subway system 
D) purely illegal activity 
E) market activity not reported to the government 
A) the coal-mining industry 
B) all ore mining 
C) the subway system 
D) purely illegal activity 
E) market activity not reported to the government

Question 6

Which of the following is not a typical goal of bureaucrats?

Accepted Answer

A) increasing the size of their bureaus 
B) gaining prestige 
C) increasing the size of their staffs 
D) increasing their bureaus' budgets 
E) achieving greater efficiency 
A) increasing the size of their bureaus 
B) gaining prestige 
C) increasing the size of their staffs 
D) increasing their bureaus' budgets 
E) achieving greater efficiency

Question 7

Special-interest legislation usually

Accepted Answer

A) has widespread benefits and costs 
B) has concentrated benefits and costs 
C) has concentrated benefits but widespread costs 
D) concerns the provision of public goods 
E) concerns the provision of private goods 
A) has widespread benefits and costs 
B) has concentrated benefits and costs 
C) has concentrated benefits but widespread costs 
D) concerns the provision of public goods 
E) concerns the provision of private goods

Question 8

If general tax revenues were used to subsidize production of toothpicks, the government's actions would have

Accepted Answer

A) widespread benefits and costs 
B) widespread costs and concentrated benefits 
C) concentrated benefits and costs 
D) widespread benefits and concentrated costs 
E) widespread benefits and either widespread or concentrated costs 
A) widespread benefits and costs 
B) widespread costs and concentrated benefits 
C) concentrated benefits and costs 
D) widespread benefits and concentrated costs 
E) widespread benefits and either widespread or concentrated costs

Question 9

Resources employed to persuade government to redistribute income and wealth to special interests are unproductive.

Accepted Answer

A) True 
 B)False

Question 10

If taxpayers can enjoy mosquito abatement whether or not they pay for it and, therefore, they tend to understate their true valuation of the spraying, this is an example of

Accepted Answer

A) private goods 
B) the median-voter model 
C) an open-access good 
D) the free-rider problem 
E) irrational ignorance 
A) private goods 
B) the median-voter model 
C) an open-access good 
D) the free-rider problem 
E) irrational ignorance

Question 11

Rent seeking reduces our economy's overall efficiency by

Accepted Answer

A) getting government to adopt legislation that actually reduces production 
B) disseminating market information 
C) lowering taxes 
D) getting voters more interested in politics 
E) reducing equity 
A) getting government to adopt legislation that actually reduces production 
B) disseminating market information 
C) lowering taxes 
D) getting voters more interested in politics 
E) reducing equity

Question 12

Public choice theory suggests that political candidates try to get elected by

Accepted Answer

A) appealing to conservatives 
B) appealing to liberals 
C) appealing to senior citizens 
D) appealing to the median voter 
E) raising taxes 
A) appealing to conservatives 
B) appealing to liberals 
C) appealing to senior citizens 
D) appealing to the median voter 
E) raising taxes

Question 13

Many eligible voters do not vote, and many who do vote don't read the biographies of candidates before they vote.These are examples of

Accepted Answer

A) the median-voter model 
B) representative government 
C) rational ignorance 
D) stupidity 
E) laziness 
A) the median-voter model 
B) representative government 
C) rational ignorance 
D) stupidity 
E) laziness

Question 14

One consequence of raising tax rates is that it

Accepted Answer

A) provides an added incentive to work 
B) provides less incentive to participate in the underground economy 
C) always increases total tax revenues 
D) leads to less underreporting of income 
E) leads to more underreporting of income 
A) provides an added incentive to work 
B) provides less incentive to participate in the underground economy 
C) always increases total tax revenues 
D) leads to less underreporting of income 
E) leads to more underreporting of income

Question 15

Exhibit 16-4   Refer to Exhibit 16-4.Suppose the government announced it would give monopoly power to one firm in the industry through an exclusive license.If successful, the welfare l oss due to monopoly would be equl to what?

Accepted Answer

A) area a 
B) area b 
C) area e 
D) area f 
E) area g 
A) area a 
B) area b 
C) area e 
D) area f 
E) area g

Question 16

A frim wishing to acquire a monopoly position would be willing to spend an amount up to its anticipated monopoly profit in rent-seeking activities.

Accepted Answer

A) True 
 B)False

Question 17

In the long run, the beneficiaries of farm price supports are

Accepted Answer

A) tenant farmers 
B) consumers 
C) taxpayers 
D) milk drinkers 
E) early owners of specialized resources 
A) tenant farmers 
B) consumers 
C) taxpayers 
D) milk drinkers 
E) early owners of specialized resources

Question 18

Exhibit 16-5   Exhibit 16-5 represents the market for leaf tobacco.Suppose the government imposes a floor of $1.25 in this market.In order to maintain this price the government will need to buy how many pounds of tobacco?

Accepted Answer

A) $900 
B) $975 
C) $1050 
D) $1125 
E) $1200 
A) $900 
B) $975 
C) $1050 
D) $1125 
E) $1200

Question 19

It is not likely that the costly special-interest farm price supports will be replaced by more efficient direct transfer payments because

Accepted Answer

A) farming would cease 
B) such a proposal would attract public attention and threaten the survival of the program 
C) the private gains from price supports exceed the costs to society 
D) a direct transfer program would require too much paperwork 
E) consumers favor the current legislation 
A) farming would cease 
B) such a proposal would attract public attention and threaten the survival of the program 
C) the private gains from price supports exceed the costs to society 
D) a direct transfer program would require too much paperwork 
E) consumers favor the current legislation

Question 20

Exhibit 16-1   Consider Exhibit 16-1.At the support price, how much of a surplus is created?

Accepted Answer

A) 25 gallons 
B) 75 gallons 
C) 100 gallons 
D) 150 gallons 
E) unknown from the information given 
A) 25 gallons 
B) 75 gallons 
C) 100 gallons 
D) 150 gallons 
E) unknown from the information given

Exam 16: Public Goods and Public Choice

To the extent that special-interest groups engage in rent seeking, they

iIf a voter expects to have little effect on government choices, that voter's behavior will reflect

Competing-interest legislation is legislation that

Agricultural subsidies in the United States are paid for by

The term underground economy refers to

Which of the following is not a typical goal of bureaucrats?

Special-interest legislation usually

If general tax revenues were used to subsidize production of toothpicks, the government's actions would have

Resources employed to persuade government to redistribute income and wealth to special interests are unproductive.

If taxpayers can enjoy mosquito abatement whether or not they pay for it and, therefore, they tend to understate their true valuation of the spraying, this is an example of

Rent seeking reduces our economy's overall efficiency by

Public choice theory suggests that political candidates try to get elected by

Many eligible voters do not vote, and many who do vote don't read the biographies of candidates before they vote.These are examples of

One consequence of raising tax rates is that it

Exhibit 16-4 Refer to Exhibit 16-4.Suppose the government announced it would give monopoly power to one firm in the industry through an exclusive license.If successful, the welfare l oss due to monopoly would be equl to what?

A frim wishing to acquire a monopoly position would be willing to spend an amount up to its anticipated monopoly profit in rent-seeking activities.

In the long run, the beneficiaries of farm price supports are

Exhibit 16-5 Exhibit 16-5 represents the market for leaf tobacco.Suppose the government imposes a floor of $1.25 in this market.In order to maintain this price the government will need to buy how many pounds of tobacco?

It is not likely that the costly special-interest farm price supports will be replaced by more efficient direct transfer payments because

Exhibit 16-1 Consider Exhibit 16-1.At the support price, how much of a surplus is created?

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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