Question 1

Sugar quotas:

Accepted Answer

A)  are not an issue in the United States despite rationally ignorant voters. 
B)  harm U.S. sugar farmers at the benefit of the candy and soda industry. 
C)  cost the typical family about $6 per year but provide millions of dollars of benefits to Florida sugar producers. 
D)  lead to lower prices and increased output, and thus are opposed by the sugar industry. 
A)  are not an issue in the United States despite rationally ignorant voters. 
B)  harm U.S. sugar farmers at the benefit of the candy and soda industry. 
C)  cost the typical family about $6 per year but provide millions of dollars of benefits to Florida sugar producers. 
D)  lead to lower prices and increased output, and thus are opposed by the sugar industry.

Question 2

Voters have a strong incentive to be well-informed about the positions of political candidates-after all, every vote counts.

Accepted Answer

A) True 
 B)False

Question 3

Explain how politicians can use the concept of rational ignorance to their benefit.

Accepted Answer

Consider the example of the sugar quota

Question 4

Reference: Ref 19-1 (Figure: Kidney Trade Ban Policy Spectrum) Refer to the figure. If there are only two candidates, A and B, and an open market for kidney trading is the only issue being debated in this election, which candidate will win the election?

Accepted Answer

A)  A 
B)  B 
C)  Neither A nor B will win this election. 
D)  Both A and B will receive an equal number of votes. 
A)  A 
B)  B 
C)  Neither A nor B will win this election. 
D)  Both A and B will receive an equal number of votes.

Question 5

Rational ignorance may cause voters to make uninformed decisions; however, the outcomes tend to be the same as if voters had full information.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following best explains why special interest groups maintain so much power in the U.S. political process?

Accepted Answer

A)  Special interest groups typically represent the largest U.S. companies, and hence get a lot of media attention. 
B)  Special interest groups stand to gain millions if particular laws are passed and lobby very hard for them; whereas voters stand to lose only a little and don't find opposing them worth their effort. 
C)  Both special interest groups as well as voters lobby politicians hard regarding certain legislation, however special interest groups typically win out because they have more money. 
D)  Special interest groups have been powerful in the past because of their ties to wealth; however, their power has been dwindling in recent years. 
A)  Special interest groups typically represent the largest U.S. companies, and hence get a lot of media attention. 
B)  Special interest groups stand to gain millions if particular laws are passed and lobby very hard for them; whereas voters stand to lose only a little and don't find opposing them worth their effort. 
C)  Both special interest groups as well as voters lobby politicians hard regarding certain legislation, however special interest groups typically win out because they have more money. 
D)  Special interest groups have been powerful in the past because of their ties to wealth; however, their power has been dwindling in recent years.

Question 7

Governments are more responsive to food crises: I. when there is more widespread newspaper circulation. II. if they are democracies. III. when there is more political competition.

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  II only 
D)  I, II, and III 
A)  I and II only 
B)  II and III only 
C)  II only 
D)  I, II, and III

Question 8

Which three variables have been shown to have strong predictive power for election results?

Accepted Answer

A)  whether the country is at war, productivity, and the divorce rate 
B)  education status, life expectancy, corporate profits 
C)  disposable income, the inflation rate, and years in office for the party in power 
D)  the savings rate, the trade deficit, and the unemployment rate of single mothers 
A)  whether the country is at war, productivity, and the divorce rate 
B)  education status, life expectancy, corporate profits 
C)  disposable income, the inflation rate, and years in office for the party in power 
D)  the savings rate, the trade deficit, and the unemployment rate of single mothers

Question 9

Rational public ignorance tends to be voluntary in democracies but public ignorance tends to be more involuntary in non-democracies.

Accepted Answer

A) True 
 B)False

Question 10

The greater the share of the population that is brought into power, the:

Accepted Answer

A)  less likely that policies will offer something for everyone in the society. 
B)  more likely that policies will offer something for everyone in the society. 
C)  less likely that policies will be efficient. 
D)  more likely that policies will impede economic growth. 
A)  less likely that policies will offer something for everyone in the society. 
B)  more likely that policies will offer something for everyone in the society. 
C)  less likely that policies will be efficient. 
D)  more likely that policies will impede economic growth.

Question 11

Why is rational ignorance important from an economic standpoint? I. Voters might not make informed choices. II. Voters will make decisions based on incorrect or incomplete information. III. Special interest groups may control economic outcomes if they are the only ones who are not rationally ignorant.

Accepted Answer

A)  I only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III 
A)  I only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III

Question 12

In the public sector, politicians:

Accepted Answer

A)  pursue primarily the general public interest since competition is less intense in the public sector. 
B)  pursue primarily the general public interest since they are concerned mostly with the collective good. 
C)  act in the narrow self-interest of their constituents and contributors to remain in office. 
D)  respond to the broader active political interests even though they choose to be rationally ignorant. 
A)  pursue primarily the general public interest since competition is less intense in the public sector. 
B)  pursue primarily the general public interest since they are concerned mostly with the collective good. 
C)  act in the narrow self-interest of their constituents and contributors to remain in office. 
D)  respond to the broader active political interests even though they choose to be rationally ignorant.

Question 13

Which of the following public policies does NOT fit the diffused costs and concentrated benefits story?

Accepted Answer

A)  agricultural subsidies 
B)  minimum wage 
C)  price supports 
D)  trade quota and tariffs 
A)  agricultural subsidies 
B)  minimum wage 
C)  price supports 
D)  trade quota and tariffs

Question 14

Which of the following statements is FALSE?

Accepted Answer

A)  The root cause of mass starvation is a lack of food. 
B)  Most mass starvations have been intentional. 
C)  Mass starvation is less likely in democracies. 
D)  Greater political competition is associated with higher levels of food distribution. 
A)  The root cause of mass starvation is a lack of food. 
B)  Most mass starvations have been intentional. 
C)  Mass starvation is less likely in democracies. 
D)  Greater political competition is associated with higher levels of food distribution.

Question 15

President Nixon increased his popularity just before the 1972 election by:

Accepted Answer

A)  lowering income taxes before the election. 
B)  lowering taxes after the election. 
C)  increasing Social Security benefits. 
D)  removing all price controls from the markets. 
A)  lowering income taxes before the election. 
B)  lowering taxes after the election. 
C)  increasing Social Security benefits. 
D)  removing all price controls from the markets.

Question 16

If the theory of the median voter holds, then extremes in political or economic stance cannot be maintained.

Accepted Answer

A) True 
 B)False

Question 17

Briefly specify the three reasons why ignorance about political matters is important.

Accepted Answer

"1. If voters are not well informed, the

Question 18

There is a strong correlation between economic freedom and:

Accepted Answer

A)  personal freedom. 
B)  religious freedom. 
C)  living standards. 
D)  economic instability. 
A)  personal freedom. 
B)  religious freedom. 
C)  living standards. 
D)  economic instability.

Question 19

According to Nobel Prize-winning economist Amartya Sen, famine would never take place in a:

Accepted Answer

A)  non-democracy. 
B)  functioning democracy. 
C)  socialist state. 
D)  state in which the government has ultimate control of food distribution. 
A)  non-democracy. 
B)  functioning democracy. 
C)  socialist state. 
D)  state in which the government has ultimate control of food distribution.

Question 20

The median voter is the voter such that half of the voters are on one side of the issue and the other half of the voters are on the other side of the issue.

Accepted Answer

A) True 
 B)False

Exam 19: Public Goods and the Tragedy of the Commons

Sugar quotas:

Voters have a strong incentive to be well-informed about the positions of political candidates-after all, every vote counts.

Explain how politicians can use the concept of rational ignorance to their benefit.

Reference: Ref 19-1 (Figure: Kidney Trade Ban Policy Spectrum) Refer to the figure. If there are only two candidates, A and B, and an open market for kidney trading is the only issue being debated in this election, which candidate will win the election?

Rational ignorance may cause voters to make uninformed decisions; however, the outcomes tend to be the same as if voters had full information.

Which of the following best explains why special interest groups maintain so much power in the U.S. political process?

Governments are more responsive to food crises: I. when there is more widespread newspaper circulation. II. if they are democracies. III. when there is more political competition.

Which three variables have been shown to have strong predictive power for election results?

Rational public ignorance tends to be voluntary in democracies but public ignorance tends to be more involuntary in non-democracies.

The greater the share of the population that is brought into power, the:

In the public sector, politicians:

Which of the following public policies does NOT fit the diffused costs and concentrated benefits story?

Which of the following statements is FALSE?

President Nixon increased his popularity just before the 1972 election by:

If the theory of the median voter holds, then extremes in political or economic stance cannot be maintained.

Briefly specify the three reasons why ignorance about political matters is important.

There is a strong correlation between economic freedom and:

According to Nobel Prize-winning economist Amartya Sen, famine would never take place in a:

The median voter is the voter such that half of the voters are on one side of the issue and the other half of the voters are on the other side of the issue.

The Big Ideas in Economics

The Power of Trade and Comparative Advantage

Business Fluctuations: Aggregate Demand and Supply

Equilibrium: How Supply and Demand Determine Prices

Elasticity and Its Applications

Taxes and Subsidies

The Price System: Signals, Speculation, and Prediction

Price Ceilings and Floors

International Trade

Externalities: When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination and Pricing Strategy

Oligopoly and Game Theory

Competing for Monopoly: the Economics of Network Goods

Monopolistic Competition and Advertising

Labor Markets

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Asymmetric Information: Moral Hazard and Adverse Selection

Consumer Choice

Gdp and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation, and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Supply and Demand

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

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