Question 1

Consumers are sovereign when

Accepted Answer

A) prices are decided by sellers. 
B) they control the government. 
C) they can prevent market failure. 
D) they have the freedom to decide what they wish to purchase. 
A) prices are decided by sellers. 
B) they control the government. 
C) they can prevent market failure. 
D) they have the freedom to decide what they wish to purchase.

Question 2

The largest spending category for state governments is

Accepted Answer

A) welfare. 
B) health care. 
C) education. 
D) highway construction. 
A) welfare. 
B) health care. 
C) education. 
D) highway construction.

Question 3

What effect have Medicare subsidies had on the consumption of medical services?

Accepted Answer

A) The consumption of medical services has been unaffected,because people don't consider the financial cost when seeking services related to their health. 
B) The consumption of medical services has been unaffected,because government restrictions have prevented patients from seeking a level of care above and beyond what they would choose if they had to pay for medical treatment out of pocket. 
C) The consumption of medical services has increased because Medicare subsidies give people the incentive to seek more care than they would otherwise. 
D) The effect cannot be measured because it is difficult to quantify the amount of resources devoted to our health care system. 
A) The consumption of medical services has been unaffected,because people don't consider the financial cost when seeking services related to their health. 
B) The consumption of medical services has been unaffected,because government restrictions have prevented patients from seeking a level of care above and beyond what they would choose if they had to pay for medical treatment out of pocket. 
C) The consumption of medical services has increased because Medicare subsidies give people the incentive to seek more care than they would otherwise. 
D) The effect cannot be measured because it is difficult to quantify the amount of resources devoted to our health care system.

Question 4

The funding of public education is

Accepted Answer

A) a private program. 
B) a subsidy program. 
C) done by voluntary contributions. 
D) provided by Social Security. 
A) a private program. 
B) a subsidy program. 
C) done by voluntary contributions. 
D) provided by Social Security.

Question 5

A subsidy is sometimes used by the government to correct the problems associated with

Accepted Answer

A) negative externalities. 
B) positive externalities. 
C) public goods. 
D) monopolies. 
A) negative externalities. 
B) positive externalities. 
C) public goods. 
D) monopolies.

Question 6

An externality is

Accepted Answer

A) a third-party benefit or cost that is associated with the production of a good. 
B) when external forces such as war or flood affect the market. 
C) government intervention in the markets. 
D) transaction costs. 
A) a third-party benefit or cost that is associated with the production of a good. 
B) when external forces such as war or flood affect the market. 
C) government intervention in the markets. 
D) transaction costs.

Question 7

A firm that has a great deal of control over the price of a good is said

Accepted Answer

A) to function in a black market. 
B) to create a tax incidence. 
C) to have monopoly power. 
D) to be in an antitrust position. 
A) to function in a black market. 
B) to create a tax incidence. 
C) to have monopoly power. 
D) to be in an antitrust position.

Question 8

A political function of government is to

Accepted Answer

A) encourage the consumption of government-sponsored goods. 
B) provide public goods. 
C) correct for externalities. 
D) encourage the workings of the price system. 
A) encourage the consumption of government-sponsored goods. 
B) provide public goods. 
C) correct for externalities. 
D) encourage the workings of the price system.

Question 9

A shift from SS1U1B11S1U1B0 to SS1U1B12S1U1B0 reflects the change that happens when a negative externality is taken into account.A shift from DS1U1B11S1U1B0 to DS1U1B12S1U1B0 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures.A positive externality exists that has not been corrected.Price and quantity will be

Accepted Answer

A)  $P _ { 1 }$ and
$\mathrm { Q } _ { 1 }$ . 
B)  $P _ { 2 }$ and
$\mathrm { Q } _ { 2 }$ . 
C)  $\mathrm { P } _ { 3 }$ and
$\mathrm { Q } _ { 3 }$ . 
D)  $\mathrm { P } _ { 4 }$ and
$\mathrm { Q } _ { 4 }$ . 
A)  $P _ { 1 }$ and
$\mathrm { Q } _ { 1 }$ . 
B)  $P _ { 2 }$ and
$\mathrm { Q } _ { 2 }$ . 
C)  $\mathrm { P } _ { 3 }$ and
$\mathrm { Q } _ { 3 }$ . 
D)  $\mathrm { P } _ { 4 }$ and
$\mathrm { Q } _ { 4 }$ .

Question 10

Fred receives a $14,000.00 per year grant by the federal government because he is disabled.This is a

Accepted Answer

A) demerit good. 
B) transfer payment. 
C) non-rival good. 
D) free rider problem. 
A) demerit good. 
B) transfer payment. 
C) non-rival good. 
D) free rider problem.

Question 11

One of the most important characteristics of the price system is that

Accepted Answer

A) consumers are the ones who ultimately decide what is produced. 
B) politicians are the ones who ultimately decide what is produced. 
C) competition among sellers is reduced. 
D) all exchanges are regulated by the government. 
A) consumers are the ones who ultimately decide what is produced. 
B) politicians are the ones who ultimately decide what is produced. 
C) competition among sellers is reduced. 
D) all exchanges are regulated by the government.

Question 12

Which of the following types of goods would most likely be classified as a government-inhibited good?

Accepted Answer

A) heroin 
B) marijuana 
C) tobacco 
D) All of the above are correct. 
A) heroin 
B) marijuana 
C) tobacco 
D) All of the above are correct.

Question 13

What is one result of the Medicare subsidy?

Accepted Answer

A) The health care industry is more efficient than it otherwise would be. 
B) Patients may elect to have some treatments that are of low value to them but that are costly to provide. 
C) The elderly population in the United States receives a lower quality of medical care than what is provided for the elderly population in other countries. 
D) The number of physicians in the United States has declined. 
A) The health care industry is more efficient than it otherwise would be. 
B) Patients may elect to have some treatments that are of low value to them but that are costly to provide. 
C) The elderly population in the United States receives a lower quality of medical care than what is provided for the elderly population in other countries. 
D) The number of physicians in the United States has declined.

Question 14

If the production of a product results in significant external costs,an appropriate government policy might be to

Accepted Answer

A) subsidize the production of the good. 
B) tax producers and thus shift the supply curve to the left. 
C) tax consumers' incomes and thus shift the demand curve to the left. 
D) subsidize consumers since the good is being under-consumed. 
A) subsidize the production of the good. 
B) tax producers and thus shift the supply curve to the left. 
C) tax consumers' incomes and thus shift the demand curve to the left. 
D) subsidize consumers since the good is being under-consumed.

Question 15

If the production of ukuleles creates a negative externality that is not corrected for by the government,the equilibrium quantity of ukuleles is

Accepted Answer

A) higher than optimal. 
B) lower than optimal. 
C) efficient. 
D) at a optimal level. 
A) higher than optimal. 
B) lower than optimal. 
C) efficient. 
D) at a optimal level.

Question 16

Which of the following might be considered a positive externality?

Accepted Answer

A) the pollination of an orange grove due to bees kept by a nearby beekeeper 
B) individuals who did not get the flu,yet did not receive a flu shot when those around them did receive the shot 
C) better fishing resulting from increased lake temperatures generated by the nearby power plant 
D) All of the above are correct. 
A) the pollination of an orange grove due to bees kept by a nearby beekeeper 
B) individuals who did not get the flu,yet did not receive a flu shot when those around them did receive the shot 
C) better fishing resulting from increased lake temperatures generated by the nearby power plant 
D) All of the above are correct.

Question 17

Government goods are provided to the consumer at a zero price.This means that

Accepted Answer

A) the cost to society is zero. 
B) the political system is run by proportional rule. 
C) people are getting something for nothing. 
D) the cost of the goods is the value of the resources used to produce the good. 
A) the cost to society is zero. 
B) the political system is run by proportional rule. 
C) people are getting something for nothing. 
D) the cost of the goods is the value of the resources used to produce the good.

Question 18

Which of the following often involves positive external benefits?

Accepted Answer

A) Water pollution 
B) Drunken driving 
C) Inoculation programs 
D) Tobacco smoking 
A) Water pollution 
B) Drunken driving 
C) Inoculation programs 
D) Tobacco smoking

Question 19

The purpose of an effluent fee is to

Accepted Answer

A) reduce the amount produced of a good and to raise the market price. 
B) correct for pollution while keeping the price of the good the same as before the correction. 
C) reward people producing externalities. 
D) encourage producers to keep the quantity produced the same while lowering the price. 
A) reduce the amount produced of a good and to raise the market price. 
B) correct for pollution while keeping the price of the good the same as before the correction. 
C) reward people producing externalities. 
D) encourage producers to keep the quantity produced the same while lowering the price.

Question 20

Which of the following is a benefit of the price system?

Accepted Answer

A) The existence of positive externalities. 
B) The production of public goods. 
C) Consumers have what they want since politicians and business managers decide what is to be produced. 
D) The freedom of consumers to decide what they want to purchase. 
A) The existence of positive externalities. 
B) The production of public goods. 
C) Consumers have what they want since politicians and business managers decide what is to be produced. 
D) The freedom of consumers to decide what they want to purchase.

Consumers are sovereign when

The largest spending category for state governments is

What effect have Medicare subsidies had on the consumption of medical services?

The funding of public education is

A subsidy is sometimes used by the government to correct the problems associated with

An externality is

A firm that has a great deal of control over the price of a good is said

A political function of government is to

Fred receives a $14,000.00 per year grant by the federal government because he is disabled.This is a

One of the most important characteristics of the price system is that

Which of the following types of goods would most likely be classified as a government-inhibited good?

What is one result of the Medicare subsidy?

If the production of a product results in significant external costs,an appropriate government policy might be to

If the production of ukuleles creates a negative externality that is not corrected for by the government,the equilibrium quantity of ukuleles is

Which of the following might be considered a positive externality?

Government goods are provided to the consumer at a zero price.This means that

Which of the following often involves positive external benefits?

The purpose of an effluent fee is to

Which of the following is a benefit of the price system?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Public Spending and Public Choice

Consumers are sovereign when

The largest spending category for state governments is

What effect have Medicare subsidies had on the consumption of medical services?

The funding of public education is

A subsidy is sometimes used by the government to correct the problems associated with

An externality is

A firm that has a great deal of control over the price of a good is said

A political function of government is to

Fred receives a $14,000.00 per year grant by the federal government because he is disabled.This is a

One of the most important characteristics of the price system is that

Which of the following types of goods would most likely be classified as a government-inhibited good?

What is one result of the Medicare subsidy?

If the production of a product results in significant external costs,an appropriate government policy might be to

If the production of ukuleles creates a negative externality that is not corrected for by the government,the equilibrium quantity of ukuleles is

Which of the following might be considered a positive externality?

Government goods are provided to the consumer at a zero price.This means that

Which of the following often involves positive external benefits?

The purpose of an effluent fee is to

Which of the following is a benefit of the price system?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters