Question 1

In public education,the value of the services provided is

Accepted Answer

A) greater than the value that parents and students place on the services. 
B) equal to the value that parents and students place on the services. 
C) less than the value that parents and students place on the services. 
D) zero since they are a public good. 
A) greater than the value that parents and students place on the services. 
B) equal to the value that parents and students place on the services. 
C) less than the value that parents and students place on the services. 
D) zero since they are a public good.

Question 2

Public education is priced below market price largely as a result of

Accepted Answer

A) government subsidy programs. 
B) under-funded public education. 
C) rising test scores by students. 
D) taxpayers who contribute little to the funding of public education. 
A) government subsidy programs. 
B) under-funded public education. 
C) rising test scores by students. 
D) taxpayers who contribute little to the funding of public education.

Question 3

A government-inhibited good is one that

Accepted Answer

A) cannot be individually consumed. 
B) would be underproduced by the private market. 
C) should be subsidized to correct the market failure and productive inefficiency. 
D) has been deemed socially undesirable via the political process. 
A) cannot be individually consumed. 
B) would be underproduced by the private market. 
C) should be subsidized to correct the market failure and productive inefficiency. 
D) has been deemed socially undesirable via the political process.

Question 4

In the absence of government,

Accepted Answer

A) public goods are likely to be overprovided. 
B) market failure is less likely to occur. 
C) public goods are likely to be underprovided. 
D) the free-rider problem is more likely to occur. 
A) public goods are likely to be overprovided. 
B) market failure is less likely to occur. 
C) public goods are likely to be underprovided. 
D) the free-rider problem is more likely to occur.

Question 5

List and explain the four key assumptions in the theory of public choice.

Accepted Answer

The key assumptions in the theory of pub

Question 6

Many nations are consistently accused of enjoying the benefits of membership in the United Nations,yet they provide few or no funds to support the organization.This is an example of

Accepted Answer

A) the principle of rival consumption. 
B) the free-rider problem. 
C) the negative externality problem. 
D) the property rights problem. 
A) the principle of rival consumption. 
B) the free-rider problem. 
C) the negative externality problem. 
D) the property rights problem.

Question 7

The difference between the economic and political functions of government is that

Accepted Answer

A) the economic function is concerned with the Federal Taxation system while the political function is not. 
B) the economic function is concerned with correcting for market failures while the political function is not. 
C) the economic function is concerned with the reallocation of income while the political function is not. 
D) the economic function encourages merit goods while the political function discourages demerit goods. 
A) the economic function is concerned with the Federal Taxation system while the political function is not. 
B) the economic function is concerned with correcting for market failures while the political function is not. 
C) the economic function is concerned with the reallocation of income while the political function is not. 
D) the economic function encourages merit goods while the political function discourages demerit goods.

Question 8

What is an externality? How do positive and negative externalities differ in their effects? How can government action correct positive and negative externalities?

Accepted Answer

An externality is a cost or benefit of a

Question 9

Explain why economists consider it to be one of the economic functions of government to provide a legal system.

Accepted Answer

A market economy relies heavily on contr

Question 10

Suppose a valley periodically floods.A dam can be built in the river that would prevent the flooding.Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

Accepted Answer

The dam would be indivisible since it mu

Question 11

Which of the following statements is true of external costs?

Accepted Answer

A) External costs should not be corrected since people will bear the costs whether they are corrected or not. 
B) There are no good ways to correct for the external costs. 
C) When external costs exist,the price of the good will be deceptively low leading to an overallocation of resources. 
D) External costs should only be corrected for if the correction will not increase the market price. 
A) External costs should not be corrected since people will bear the costs whether they are corrected or not. 
B) There are no good ways to correct for the external costs. 
C) When external costs exist,the price of the good will be deceptively low leading to an overallocation of resources. 
D) External costs should only be corrected for if the correction will not increase the market price.

Question 12

Which of the following is an example of a public good?

Accepted Answer

A) Flood control 
B) Post Office 
C) Health care 
D) Welfare 
A) Flood control 
B) Post Office 
C) Health care 
D) Welfare

Question 13

According to the textbook,what are the two key political functions of government in a market economy?

Accepted Answer

The two functions of governmen

Question 14

What would happen in a free market system when production of a good generates negative externalities?

Accepted Answer

A) There is a shortage of the good. 
B) There is a surplus of the good. 
C) The equilibrium quantity of the good is less than the efficient amount. 
D) The equilibrium quantity of the good is more than the efficient amount. 
A) There is a shortage of the good. 
B) There is a surplus of the good. 
C) The equilibrium quantity of the good is less than the efficient amount. 
D) The equilibrium quantity of the good is more than the efficient amount.

Question 15

How does the government carry out income redistribution?

Accepted Answer

Income redistribution can be carried out

Question 16

-Refer to the above figure.In the absence of a subsidy,

Accepted Answer

A) Qd would be demanded and $\mathrm { Q } _ { \mathrm { M } }$ would be supplied. 
B) the price Pd would be charged and quantity $\mathrm { Q } _ { \mathrm { M } }$ demanded. 
C) the quantity Qo and price Po would prevail in the market. 
D) None of the above is correct. 
A) Qd would be demanded and $\mathrm { Q } _ { \mathrm { M } }$ would be supplied. 
B) the price Pd would be charged and quantity $\mathrm { Q } _ { \mathrm { M } }$ demanded. 
C) the quantity Qo and price Po would prevail in the market. 
D) None of the above is correct.

Question 17

-According to the above figure,if steel mills are charged an effluent fee in order to bear the cost of pollution,what happens to the equilibrium price and equilibrium quantity?

Accepted Answer

A) They are unchanged. 
B) They change from P1 and Q1 to P2 and Q2. 
C) They change from P2 and Q2 to P1 and Q1. 
D) The equilibrium price increases from P1 and P2,but the equilibrium quantity is unchanged. 
A) They are unchanged. 
B) They change from P1 and Q1 to P2 and Q2. 
C) They change from P2 and Q2 to P1 and Q1. 
D) The equilibrium price increases from P1 and P2,but the equilibrium quantity is unchanged.

Question 18

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 above figures.Prior to the shift of the curves,which panel and which curve involve the existence of negative externality?

Accepted Answer

A) Panel 1 and S1 
B) Panel 1 and S2 
C) Panel 2 and D1 
D) Panel 2 and D2 
A) Panel 1 and S1 
B) Panel 1 and S2 
C) Panel 2 and D1 
D) Panel 2 and D2

Question 19

One way that the government encourages the production of a good with positive externalities is to offer

Accepted Answer

A) an effluent fee. 
B) a market to pollute. 
C) a subsidy. 
D) a pollution tax. 
A) an effluent fee. 
B) a market to pollute. 
C) a subsidy. 
D) a pollution tax.

Question 20

Which of the following goods is NOT subject to the free-rider problem?

Accepted Answer

A) National defense 
B) The local police force 
C) Public fireworks 
D) A public transit system 
A) National defense 
B) The local police force 
C) Public fireworks 
D) A public transit system

In public education,the value of the services provided is

Public education is priced below market price largely as a result of

A government-inhibited good is one that

In the absence of government,

List and explain the four key assumptions in the theory of public choice.

Many nations are consistently accused of enjoying the benefits of membership in the United Nations,yet they provide few or no funds to support the organization.This is an example of

The difference between the economic and political functions of government is that

What is an externality? How do positive and negative externalities differ in their effects? How can government action correct positive and negative externalities?

Explain why economists consider it to be one of the economic functions of government to provide a legal system.

Suppose a valley periodically floods.A dam can be built in the river that would prevent the flooding.Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

Which of the following statements is true of external costs?

Which of the following is an example of a public good?

According to the textbook,what are the two key political functions of government in a market economy?

What would happen in a free market system when production of a good generates negative externalities?

How does the government carry out income redistribution?

-Refer to the above figure.In the absence of a subsidy,

-According to the above figure,if steel mills are charged an effluent fee in order to bear the cost of pollution,what happens to the equilibrium price and equilibrium quantity?

One way that the government encourages the production of a good with positive externalities is to offer

Which of the following goods is NOT subject to the free-rider problem?

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

In public education,the value of the services provided is

Public education is priced below market price largely as a result of

A government-inhibited good is one that

In the absence of government,

List and explain the four key assumptions in the theory of public choice.

Many nations are consistently accused of enjoying the benefits of membership in the United Nations,yet they provide few or no funds to support the organization.This is an example of

The difference between the economic and political functions of government is that

What is an externality? How do positive and negative externalities differ in their effects? How can government action correct positive and negative externalities?

Explain why economists consider it to be one of the economic functions of government to provide a legal system.

Suppose a valley periodically floods.A dam can be built in the river that would prevent the flooding.Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

Which of the following statements is true of external costs?

Which of the following is an example of a public good?

According to the textbook,what are the two key political functions of government in a market economy?

What would happen in a free market system when production of a good generates negative externalities?

How does the government carry out income redistribution?

-Refer to the above figure.In the absence of a subsidy,

-According to the above figure,if steel mills are charged an effluent fee in order to bear the cost of pollution,what happens to the equilibrium price and equilibrium quantity?

One way that the government encourages the production of a good with positive externalities is to offer

Which of the following goods is NOT subject to the free-rider problem?

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