Question 1

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.

Question 2

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 3

A characteristic of a public good is

Accepted Answer

A) rival consumption. 
B) the exclusion principle. 
C) the free-rider problem. 
D) clear property rights. 
A) rival consumption. 
B) the exclusion principle. 
C) the free-rider problem. 
D) clear property rights.

Question 4

The economic functions of the government deal with

Accepted Answer

A) discouraging smoking in youths. 
B) making sure supply equal demand. 
C) promoting economic efficiency. 
D) excess demand. 
A) discouraging smoking in youths. 
B) making sure supply equal demand. 
C) promoting economic efficiency. 
D) excess demand.

Question 5

Why does our government enforce antitrust legislation?

Accepted Answer

A) because monopolies are known to be unfair to their stockholders 
B) because monopolies are known to be unfair to their employees 
C) because the government wants to create competition in markets in the interests of promoting efficiency 
D) because the government wants to create competition in markets in the interests of promoting an equal distribution of income 
A) because monopolies are known to be unfair to their stockholders 
B) because monopolies are known to be unfair to their employees 
C) because the government wants to create competition in markets in the interests of promoting efficiency 
D) because the government wants to create competition in markets in the interests of promoting an equal distribution of income

Question 6

In graphical form,the presence of an external benefit that is ignored by consumers can be shown as

Accepted Answer

A) a market demand curve to the left of the market demand curve for which the consumers take the external benefit into account. 
B) a market demand curve to the right of the market demand curve for which the consumers take the external benefit into account. 
C) a market demand curve the same as the market demand curve for which the consumers take the external benefit into account. 
D) the absence of a market demand curve. 
A) a market demand curve to the left of the market demand curve for which the consumers take the external benefit into account. 
B) a market demand curve to the right of the market demand curve for which the consumers take the external benefit into account. 
C) a market demand curve the same as the market demand curve for which the consumers take the external benefit into account. 
D) the absence of a market demand curve.

Question 7

How do public goods differ from private goods?

Accepted Answer

A private good is characterized by the p

Question 8

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 9

Ms.Smith is given a voucher for an apartment in a public housing project.The apartment

Accepted Answer

A) is not subject to the principle of rival consumption. 
B) is not a public good. 
C) has widespread benefits and concentrated costs. 
D) is subject to the exclusion principle. 
A) is not subject to the principle of rival consumption. 
B) is not a public good. 
C) has widespread benefits and concentrated costs. 
D) is subject to the exclusion principle.

Question 10

The incentive structure is a

Accepted Answer

A) system of rewards and punishments that individuals consider when making decisions. 
B) system determined by the federal government that gives certain states more federal funds. 
C) system of infrastructure in the United States that improves commerce. 
D) system of checks and balances in the government. 
A) system of rewards and punishments that individuals consider when making decisions. 
B) system determined by the federal government that gives certain states more federal funds. 
C) system of infrastructure in the United States that improves commerce. 
D) system of checks and balances in the government.

Question 11

When does the free-rider problem arise?

Accepted Answer

A) when someone who benefits from a good does not have to contribute to paying for it 
B) when a firm does not have to advertise,because its customers recommend the product to their friends 
C) when policymakers ignore opportunity costs in making decisions 
D) when production of a good generates pollution 
A) when someone who benefits from a good does not have to contribute to paying for it 
B) when a firm does not have to advertise,because its customers recommend the product to their friends 
C) when policymakers ignore opportunity costs in making decisions 
D) when production of a good generates pollution

Question 12

A situation in which the market system allocates too many resources to the production of a given activity is known as

Accepted Answer

A) market allocation. 
B) market failure. 
C) market efficiency. 
D) market breakdown. 
A) market allocation. 
B) market failure. 
C) market efficiency. 
D) market breakdown.

Question 13

Safe Bank has an outside display which has the time and temperature that is always correct.This is an example of

Accepted Answer

A) an interference in the workings of the price system. 
B) a breakdown in communication between the bank and its customers. 
C) a negative externality. 
D) a positive externality. 
A) an interference in the workings of the price system. 
B) a breakdown in communication between the bank and its customers. 
C) a negative externality. 
D) a positive externality.

Question 14

Which of the following is best characterized as a public good?

Accepted Answer

A) A public library 
B) A church 
C) Primary education 
D) Police protection 
A) A public library 
B) A church 
C) Primary education 
D) Police protection

Question 15

Public goods are desired because

Accepted Answer

A) people want and value them but the private sector will not make them available. 
B) we want the government to spend our tax dollars. 
C) they came in small units. 
D) they make supply equal to demand for private goods. 
A) people want and value them but the private sector will not make them available. 
B) we want the government to spend our tax dollars. 
C) they came in small units. 
D) they make supply equal to demand for private goods.

Question 16

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 17

In the U.S.economy,which of the following is NOT a generally accepted economic function of government?

Accepted Answer

A) Providing public goods 
B) Distributing consumer goods 
C) Ensuring economy-wide stability 
D) Promoting competition in the marketplace 
A) Providing public goods 
B) Distributing consumer goods 
C) Ensuring economy-wide stability 
D) Promoting competition in the marketplace

Question 18

Public goods face the

Accepted Answer

A) principle of rival consumption. 
B) free-rider problem. 
C) law of overproduction. 
D) exclusion principle. 
A) principle of rival consumption. 
B) free-rider problem. 
C) law of overproduction. 
D) exclusion principle.

Question 19

Receiving a voucher for an apartment in a public housing project would be an example of a good that satisfies

Accepted Answer

A) the principle of rival consumption. 
B) the definition of a public good. 
C) the definition of a good with a positive externality. 
D) the nonexclusion principle. 
A) the principle of rival consumption. 
B) the definition of a public good. 
C) the definition of a good with a positive externality. 
D) the nonexclusion principle.

Question 20

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.

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

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

A characteristic of a public good is

The economic functions of the government deal with

Why does our government enforce antitrust legislation?

In graphical form,the presence of an external benefit that is ignored by consumers can be shown as

How do public goods differ from private goods?

When there is an external benefit,the unregulated market

Ms.Smith is given a voucher for an apartment in a public housing project.The apartment

The incentive structure is a

When does the free-rider problem arise?

A situation in which the market system allocates too many resources to the production of a given activity is known as

Safe Bank has an outside display which has the time and temperature that is always correct.This is an example of

Which of the following is best characterized as a public good?

Public goods are desired because

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

In the U.S.economy,which of the following is NOT a generally accepted economic function of government?

Public goods face the

Receiving a voucher for an apartment in a public housing project would be an example of a good that satisfies

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

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Public Spending and Public Choice

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

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

A characteristic of a public good is

The economic functions of the government deal with

Why does our government enforce antitrust legislation?

In graphical form,the presence of an external benefit that is ignored by consumers can be shown as

How do public goods differ from private goods?

When there is an external benefit,the unregulated market

Ms.Smith is given a voucher for an apartment in a public housing project.The apartment

The incentive structure is a

When does the free-rider problem arise?

A situation in which the market system allocates too many resources to the production of a given activity is known as

Safe Bank has an outside display which has the time and temperature that is always correct.This is an example of

Which of the following is best characterized as a public good?

Public goods are desired because

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

In the U.S.economy,which of the following is NOT a generally accepted economic function of government?

Public goods face the

Receiving a voucher for an apartment in a public housing project would be an example of a good that satisfies

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

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters