Question 1

The largest _______ transfer payment in the United States is _______ .

Accepted Answer

A)  non-means-tested; Medicaid 
B)  non-means-tested; Social Security payments to retired persons 
C)  means-tested; farmers aid 
D)  means-tested; Social Security payments to retired persons 
A)  non-means-tested; Medicaid 
B)  non-means-tested; Social Security payments to retired persons 
C)  means-tested; farmers aid 
D)  means-tested; Social Security payments to retired persons

Question 2

In the case of a coal-burning plant that generates pollutants:

Accepted Answer

A)  the firm would consider the cost of this pollution in its production decisions even in the absence of regulation. 
B)  consumers are faced with prices that reflect the full cost of production. 
C)  government agencies may seek to limit the emission of pollution through regulation. 
D)  the people who buy the output of the plant have to pay the costs of pollution abatement. 
A)  the firm would consider the cost of this pollution in its production decisions even in the absence of regulation. 
B)  consumers are faced with prices that reflect the full cost of production. 
C)  government agencies may seek to limit the emission of pollution through regulation. 
D)  the people who buy the output of the plant have to pay the costs of pollution abatement.

Question 3

If the marginal benefit received from a good is greater than the marginal opportunity cost of production, then:

Accepted Answer

A)  society's well-being can be improved if production decreases. 
B)  society's well-being cannot be improved by changing production. 
C)  the market is producing too much of the good. 
D)  the market is producing too little of the good. 
A)  society's well-being can be improved if production decreases. 
B)  society's well-being cannot be improved by changing production. 
C)  the market is producing too much of the good. 
D)  the market is producing too little of the good.

Question 4

Use the following to answer question(s): Market Failure
  
-(Exhibit: Market Failure) If the market produces quantity G, then:

Accepted Answer

A)  marginal benefit is less than marginal cost. 
B)  marginal benefit is equal to marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and less than marginal benefit. 
A)  marginal benefit is less than marginal cost. 
B)  marginal benefit is equal to marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and less than marginal benefit.

Question 5

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition
  
-(Exhibit: Correcting for Market Failure: Imperfect Competition) If the government intervenes to induce the imperfectly competitive firm shown in this exhibit to produce at the efficient level of output, the gain will be the _______ under the _______ curve between ________ .

Accepted Answer

A)  area; supply; R and W 
B)  area; demand; R and W 
C)  vertical distance; demand; V and W 
D)  vertical distance; supply ; V and W 
A)  area; supply; R and W 
B)  area; demand; R and W 
C)  vertical distance; demand; V and W 
D)  vertical distance; supply ; V and W

Question 6

Tax incidence analysis seeks to determine who sends in the tax payment.

Accepted Answer

A) True 
 B)False

Question 7

A decision not to vote because the marginal costs outweigh the marginal benefits is called:

Accepted Answer

A)  the "there is nothing so frightful as ignorance in action" effect. 
B)  the individual welfare criterion. 
C)  rational abstention. 
D)  the logical voting effect. 
A)  the "there is nothing so frightful as ignorance in action" effect. 
B)  the individual welfare criterion. 
C)  rational abstention. 
D)  the logical voting effect.

Question 8

A progressive tax takes a lower percentage of income as income rises.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true?

Accepted Answer

A)  Government purchases fell dramatically during World War II. 
B)  Government purchases rose during the Korean War and did not drop very far back afterward. 
C)  Government purchases have remained at about 30 percent of GDP since the Korean War. 
D)  Government purchases have remained at about 40 percent of GDP since World War II. 
A)  Government purchases fell dramatically during World War II. 
B)  Government purchases rose during the Korean War and did not drop very far back afterward. 
C)  Government purchases have remained at about 30 percent of GDP since the Korean War. 
D)  Government purchases have remained at about 40 percent of GDP since World War II.

Question 10

The Case in Point on Marginal Tax Rates suggests:

Accepted Answer

A)  a lower marginal tax rate for a 60-year old couple because of lower retirement income. 
B)  a higher marginal tax rate for a 30-year old couple because of payroll taxes. 
C)  equivalent tax rates across different age groups because of the number of social programs that tend to offset each other. 
D)  a negative marginal tax rate for a 30-year old couple because they are more likely to have children and qualify for a variety of programs and tax credits. 
A)  a lower marginal tax rate for a 60-year old couple because of lower retirement income. 
B)  a higher marginal tax rate for a 30-year old couple because of payroll taxes. 
C)  equivalent tax rates across different age groups because of the number of social programs that tend to offset each other. 
D)  a negative marginal tax rate for a 30-year old couple because they are more likely to have children and qualify for a variety of programs and tax credits.

Question 11

According to public choice theory, being too busy to take the time off to vote may be the result of:

Accepted Answer

A)  rational participation. 
B)  rational abstention. 
C)  rent seeking. 
D)  ignorance in action. 
A)  rational participation. 
B)  rational abstention. 
C)  rent seeking. 
D)  ignorance in action.

Question 12

The property tax is a regressive tax.

Accepted Answer

A) True 
 B)False

Question 13

According to the Case in Point on Externalities, Irrationalities, and Smoking, how do cigarettes impose external costs on others?

Accepted Answer

A)  causing fires that destroy property 
B)  people dying as a result of secondhand smoke 
C)  increased health-care costs and health insurance premiums 
D)  all of the above 
A)  causing fires that destroy property 
B)  people dying as a result of secondhand smoke 
C)  increased health-care costs and health insurance premiums 
D)  all of the above

Question 14

Government engages in transfer payments in part to redistribute income.

Accepted Answer

A) True 
 B)False

Question 15

Goods whose consumption the public sector promotes are called merit goods.

Accepted Answer

A) True 
 B)False

Question 16

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained free is the:

Accepted Answer

A)  free-cost problem. 
B)  free-rider problem. 
C)  free-goods problem. 
D)  free-market problem. 
A)  free-cost problem. 
B)  free-rider problem. 
C)  free-goods problem. 
D)  free-market problem.

Question 17

Taxation according to the ability-to-pay principle is best illustrated in the United States by:

Accepted Answer

A)  sales taxes. 
B)  personal income taxes. 
C)  excise taxes. 
D)  user fees. 
A)  sales taxes. 
B)  personal income taxes. 
C)  excise taxes. 
D)  user fees.

Question 18

The quantification of benefits and costs of activity by public officials in an effort to locate the efficient solution is characteristic of the _______ approach to studying public sector choice.

Accepted Answer

A)  federal budget studies 
B)  rational abstention 
C)  public interest theory 
D)  public choice theory 
A)  federal budget studies 
B)  rational abstention 
C)  public interest theory 
D)  public choice theory

Question 19

A fundamental reason for concern about the distribution of income, according to the text, is that:

Accepted Answer

A)  the efficiency argument is the most important criterion in this regard. 
B)  people care about the welfare of others. 
C)  people with higher incomes often desire to hurt those with lower incomes. 
D)  most people think private charity efficiently handles cases of poverty. 
A)  the efficiency argument is the most important criterion in this regard. 
B)  people care about the welfare of others. 
C)  people with higher incomes often desire to hurt those with lower incomes. 
D)  most people think private charity efficiently handles cases of poverty.

Question 20

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition
  
-(Exhibit: Correcting for Market Failure: Imperfect Competition) If the government intervenes to induce the imperfectly competitive firm shown in this exhibit to produce at the efficient level of output, the gain will be _______ and the cost will be ________.

Accepted Answer

A)  RUVW; RTVW 
B)  RTVW; RUVW 
C)  RW; VW 
D)  UT; RT 
A)  RUVW; RTVW 
B)  RTVW; RUVW 
C)  RW; VW 
D)  UT; RT

The largest _ transfer payment in the United States is _ .

In the case of a coal-burning plant that generates pollutants:

If the marginal benefit received from a good is greater than the marginal opportunity cost of production, then:

Use the following to answer question(s): Market Failure -(Exhibit: Market Failure) If the market produces quantity G, then:

Tax incidence analysis seeks to determine who sends in the tax payment.

A decision not to vote because the marginal costs outweigh the marginal benefits is called:

A progressive tax takes a lower percentage of income as income rises.

Which of the following statements is true?

The Case in Point on Marginal Tax Rates suggests:

According to public choice theory, being too busy to take the time off to vote may be the result of:

The property tax is a regressive tax.

According to the Case in Point on Externalities, Irrationalities, and Smoking, how do cigarettes impose external costs on others?

Government engages in transfer payments in part to redistribute income.

Goods whose consumption the public sector promotes are called merit goods.

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained free is the:

Taxation according to the ability-to-pay principle is best illustrated in the United States by:

The quantification of benefits and costs of activity by public officials in an effort to locate the efficient solution is characteristic of the _______ approach to studying public sector choice.

A fundamental reason for concern about the distribution of income, according to the text, is that:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 15: Public Finance and Public Choice

The largest _______ transfer payment in the United States is _______ .

In the case of a coal-burning plant that generates pollutants:

If the marginal benefit received from a good is greater than the marginal opportunity cost of production, then:

Use the following to answer question(s): Market Failure -(Exhibit: Market Failure) If the market produces quantity G, then:

Tax incidence analysis seeks to determine who sends in the tax payment.

A decision not to vote because the marginal costs outweigh the marginal benefits is called:

A progressive tax takes a lower percentage of income as income rises.

Which of the following statements is true?

The Case in Point on Marginal Tax Rates suggests:

According to public choice theory, being too busy to take the time off to vote may be the result of:

The property tax is a regressive tax.

According to the Case in Point on Externalities, Irrationalities, and Smoking, how do cigarettes impose external costs on others?

Government engages in transfer payments in part to redistribute income.

Goods whose consumption the public sector promotes are called merit goods.

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained free is the:

Taxation according to the ability-to-pay principle is best illustrated in the United States by:

The quantification of benefits and costs of activity by public officials in an effort to locate the efficient solution is characteristic of the _______ approach to studying public sector choice.

A fundamental reason for concern about the distribution of income, according to the text, is that:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

The largest _ transfer payment in the United States is _ .