Question 1

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

Accepted Answer

A) inoculation against a contagious disease 
B) a streetlight 
C) garbage collection 
D) Internet access 
A) inoculation against a contagious disease 
B) a streetlight 
C) garbage collection 
D) Internet access

Question 2

-Refer to the above figure.Medicare subsidies have increased the price of medical services to $\mathrm { P } _ { \mathrm { s } }$ .Which of the following statements is true about the effect the Medicare subsidy has had on the consumption of medical services?

Accepted Answer

A) The amount of medical services provided has decreased from $\mathrm { Q } _ { 0 }$ to
$\mathrm { Q } _ { \mathrm { d } }$ as a result of the subsidy. 
B) The amount of medical services provided has increased from $\mathrm { Q } _ { 0 }$ to
$\mathrm { Q } _ { \mathrm { M } }$ as a result of the subsidy. 
C) The amount of medical services provided has increased from $\mathrm { Q } _ { \mathrm { d } }$ to
$\mathrm { Q } _ { \mathrm { M } }$ as a result of the subsidy. 
D) The amount of medical services provided has remained unchanged as a result of the subsidy. 
A) The amount of medical services provided has decreased from $\mathrm { Q } _ { 0 }$ to
$\mathrm { Q } _ { \mathrm { d } }$ as a result of the subsidy. 
B) The amount of medical services provided has increased from $\mathrm { Q } _ { 0 }$ to
$\mathrm { Q } _ { \mathrm { M } }$ as a result of the subsidy. 
C) The amount of medical services provided has increased from $\mathrm { Q } _ { \mathrm { d } }$ to
$\mathrm { Q } _ { \mathrm { M } }$ as a result of the subsidy. 
D) The amount of medical services provided has remained unchanged as a result of the subsidy.

Question 3

Which of the following statements is NOT true of external benefits?

Accepted Answer

A) External benefits lead to an underallocation of resources to the production of the good that has the external benefit. 
B) External benefits lead to a price in the market that is too high. 
C) External benefits lead to too few of the goods that have the external benefit being produced. 
D) External benefits are a good thing for the allocation of resources because people are getting something at no cost. 
A) External benefits lead to an underallocation of resources to the production of the good that has the external benefit. 
B) External benefits lead to a price in the market that is too high. 
C) External benefits lead to too few of the goods that have the external benefit being produced. 
D) External benefits are a good thing for the allocation of resources because people are getting something at no cost.

Question 4

Which of the following is NOT related to the government's political function of income redistribution?

Accepted Answer

A) Providing money transfer payments 
B) Excise tax on gasoline 
C) Social Security 
D) In-kind transfers 
A) Providing money transfer payments 
B) Excise tax on gasoline 
C) Social Security 
D) In-kind transfers

Question 5

When there is an external benefit,the unregulated market

Accepted Answer

A) overproduces the good or service. 
B) underproduces the good or service. 
C) reaches the most efficient solution. 
D) maximizes public welfare. 
A) overproduces the good or service. 
B) underproduces the good or service. 
C) reaches the most efficient solution. 
D) maximizes public welfare.

Question 6

-In the above figure,the total dollar amount of the Medicare subsidies provided by the government is equal to

Accepted Answer

A) the difference between $\mathrm { P } _ { \mathrm { s } }$ and $\mathrm { P } _ { 0 }$ multiplied by $\mathrm { Q } _ { \mathrm { M } }$ . 
B) the difference between $\mathrm { P } _ { \mathrm { s } }$ and $\mathrm { P } _ { \mathrm { d } }$ multiplied by $\mathrm { Q } _ { \mathrm { M } }$ . 
C) the difference between $\mathrm { P } _ { 0 }$ and $\mathrm { P } _ { \mathrm { d } }$ multiplied by $\mathrm { Q } _ { \mathrm { d } }$ . 
D) the difference between $\mathrm { P } _ { \mathrm { s } }$ and $\mathrm { P } _ { \mathrm { d } }$ multiplied by $\mathrm { Q } _ { 0 }$ . 
A) the difference between $\mathrm { P } _ { \mathrm { s } }$ and $\mathrm { P } _ { 0 }$ multiplied by $\mathrm { Q } _ { \mathrm { M } }$ . 
B) the difference between $\mathrm { P } _ { \mathrm { s } }$ and $\mathrm { P } _ { \mathrm { d } }$ multiplied by $\mathrm { Q } _ { \mathrm { M } }$ . 
C) the difference between $\mathrm { P } _ { 0 }$ and $\mathrm { P } _ { \mathrm { d } }$ multiplied by $\mathrm { Q } _ { \mathrm { d } }$ . 
D) the difference between $\mathrm { P } _ { \mathrm { s } }$ and $\mathrm { P } _ { \mathrm { d } }$ multiplied by $\mathrm { Q } _ { 0 }$ .

Question 7

An external cost,such as the cost generated by pollution,is

Accepted Answer

A) a cost paid by consumers of the product. 
B) a cost paid by producers of the product. 
C) a cost paid by a third party or by society at large. 
D) not a true opportunity cost of production. 
A) a cost paid by consumers of the product. 
B) a cost paid by producers of the product. 
C) a cost paid by a third party or by society at large. 
D) not a true opportunity cost of production.

Question 8

A negative externality is a situation in which

Accepted Answer

A) there is a spillover of benefits. 
B) a cost associated with an economic activity is borne by a third party. 
C) a firm is paying in excess of the total costs of producing a good. 
D) none of the above. 
A) there is a spillover of benefits. 
B) a cost associated with an economic activity is borne by a third party. 
C) a firm is paying in excess of the total costs of producing a good. 
D) none of the above.

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.Externalities exist in both panels.After correcting for the externalities the prices should be

Accepted Answer

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

Question 10

Explain why ensuring economic stability is an economics function of government?

Accepted Answer

Our economy sometimes faces the problems

Question 11

A difference between the market and the public sector is that

Accepted Answer

A) scarcity exists only in the market sector. 
B) government can use force,while the market does not. 
C) we can only vote in the public sector. 
D) the cost of private goods to society is zero. 
A) scarcity exists only in the market sector. 
B) government can use force,while the market does not. 
C) we can only vote in the public sector. 
D) the cost of private goods to society is zero.

Question 12

What is an effluent fee? Graphically,show how an effluent fee can correct an externality.

Accepted Answer

@#IMG-DLM& An effluent fee is a charge to a pollut

Question 13

Medicare subsidies will cause people to

Accepted Answer

A) perceive the price they pay per unit of medical services to be lower than the price received by the provider. 
B) perceive the price they pay per unit of medical services to be higher than the price received by the provider. 
C) perceive the price they pay per unit of medical services to be exactly equal to the price received by the provider. 
D) demand fewer services. 
A) perceive the price they pay per unit of medical services to be lower than the price received by the provider. 
B) perceive the price they pay per unit of medical services to be higher than the price received by the provider. 
C) perceive the price they pay per unit of medical services to be exactly equal to the price received by the provider. 
D) demand fewer services.

Question 14

An economic activity in which benefits or costs affect third parties is called

Accepted Answer

A) a public good. 
B) a third-party good. 
C) the exclusion principle. 
D) an externality. 
A) a public good. 
B) a third-party good. 
C) the exclusion principle. 
D) an externality.

Question 15

An effluent fee is more effective when imposed on

Accepted Answer

A) the firm or producer of the product which generates pollution. 
B) the consumer of the product. 
C) neither the producer nor the consumer of the product. 
D) the supplier of the raw material used by the firm. 
A) the firm or producer of the product which generates pollution. 
B) the consumer of the product. 
C) neither the producer nor the consumer of the product. 
D) the supplier of the raw material used by the firm.

Question 16

What is the assumption underlying public-choice theory?

Accepted Answer

A) Elected officials believe in cooperating with one another and they seek to avoid competition among themselves. 
B) The costs and benefits of being efficient are the same whether one is in the private sector or in the public sector. 
C) Individuals act within the political process to improve their own individual well-being. 
D) Resources in the public sector are not scarce. 
A) Elected officials believe in cooperating with one another and they seek to avoid competition among themselves. 
B) The costs and benefits of being efficient are the same whether one is in the private sector or in the public sector. 
C) Individuals act within the political process to improve their own individual well-being. 
D) Resources in the public sector are not scarce.

Question 17

Medicare and Social Security are examples of

Accepted Answer

A) transfer payment programs. 
B) public goods. 
C) programs that do not respond to rational economic incentives. 
D) the efficient allocation of resources under a free market system. 
A) transfer payment programs. 
B) public goods. 
C) programs that do not respond to rational economic incentives. 
D) the efficient allocation of resources under a free market system.

Question 18

The government's policy of reducing payments for physicians' services has generated a relative

Accepted Answer

A) increase in the number of physicians in the program. 
B) reduction in the number of physicians in the program. 
C) reduction in the demand for medical services. 
D) increase in the income of the physicians remaining in the program. 
A) increase in the number of physicians in the program. 
B) reduction in the number of physicians in the program. 
C) reduction in the demand for medical services. 
D) increase in the income of the physicians remaining in the program.

Question 19

Society is likely to over-allocate resources to produce goods that

Accepted Answer

A) are public goods. 
B) are merit goods. 
C) generate positive externalities. 
D) generate negative externalities. 
A) are public goods. 
B) are merit goods. 
C) generate positive externalities. 
D) generate negative externalities.

Question 20

What are the three goals of the Employment Act of 1946?

Accepted Answer

A) Keep the peace,improve public education,and protect the environment 
B) Improve the education system,provide more job training,and expand the number of government jobs 
C) Full employment,price stability,and economic growth 
D) Full employment,better schools,and lower income taxes 
A) Keep the peace,improve public education,and protect the environment 
B) Improve the education system,provide more job training,and expand the number of government jobs 
C) Full employment,price stability,and economic growth 
D) Full employment,better schools,and lower income taxes

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

Which of the following statements is NOT true of external benefits?

Which of the following is NOT related to the government's political function of income redistribution?

When there is an external benefit,the unregulated market

-In the above figure,the total dollar amount of the Medicare subsidies provided by the government is equal to

An external cost,such as the cost generated by pollution,is

A negative externality is a situation in which

Explain why ensuring economic stability is an economics function of government?

A difference between the market and the public sector is that

What is an effluent fee? Graphically,show how an effluent fee can correct an externality.

Medicare subsidies will cause people to

An economic activity in which benefits or costs affect third parties is called

An effluent fee is more effective when imposed on

What is the assumption underlying public-choice theory?

Medicare and Social Security are examples of

The government's policy of reducing payments for physicians' services has generated a relative

Society is likely to over-allocate resources to produce goods that

What are the three goals of the Employment Act of 1946?

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

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

-Refer to the above figure.Medicare subsidies have increased the price of medical services to Ps\mathrm { P } _ { \mathrm { s } }Ps​ .Which of the following statements is true about the effect the Medicare subsidy has had on the consumption of medical services?

Which of the following statements is NOT true of external benefits?

Which of the following is NOT related to the government's political function of income redistribution?

When there is an external benefit,the unregulated market

-In the above figure,the total dollar amount of the Medicare subsidies provided by the government is equal to

An external cost,such as the cost generated by pollution,is

A negative externality is a situation in which

Explain why ensuring economic stability is an economics function of government?

A difference between the market and the public sector is that

What is an effluent fee? Graphically,show how an effluent fee can correct an externality.

Medicare subsidies will cause people to

An economic activity in which benefits or costs affect third parties is called

An effluent fee is more effective when imposed on

What is the assumption underlying public-choice theory?

Medicare and Social Security are examples of

The government's policy of reducing payments for physicians' services has generated a relative

Society is likely to over-allocate resources to produce goods that

What are the three goals of the Employment Act of 1946?

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