Question 1

All of the following generate positive externalities EXCEPT

Accepted Answer

A) public health programs. 
B) lower marginal tax rates. 
C) requiring proof of inoculation before entering college. 
D) requiring proof of inoculation before entering elementary school. 
A) public health programs. 
B) lower marginal tax rates. 
C) requiring proof of inoculation before entering college. 
D) requiring proof of inoculation before entering elementary school.

Question 2

Which of the following statements is TRUE?

Accepted Answer

A) Government spending as a percent of total national income has continuously decreased since the 1950s. 
B) Transfer payments are money payments made by the government for which no goods or services are currently received. 
C) Education is the largest category of federal government expenditures. 
D) Transfers in kind include Welfare,Social Security,and unemployment insurance benefits. 
A) Government spending as a percent of total national income has continuously decreased since the 1950s. 
B) Transfer payments are money payments made by the government for which no goods or services are currently received. 
C) Education is the largest category of federal government expenditures. 
D) Transfers in kind include Welfare,Social Security,and unemployment insurance benefits.

Question 3

A lighthouse that serves a dangerous coastal area is built.The lighthouse cost $500,000 to build and serves 500 ships a month.If the shipping in the area increases so that 750 ships pass by a month,the increase in additional costs of providing the light to these new ships is

Accepted Answer

A) $500,000. 
B) $250,000. 
C) $250. 
D) $0. 
A) $500,000. 
B) $250,000. 
C) $250. 
D) $0.

Question 4

In the above figure,if a Medicare subsidy that had previously been paid by the government has now been eliminated,the result will be

Accepted Answer

A) an increase in the price received by producers,from   to   . 
B) a decrease in the price received by producers,from   to   . 
C) an increase in the price paid by consumers,from   to   . 
D) a decrease in the price paid by consumers,from   to   . 
A) an increase in the price received by producers,from   to   . 
B) a decrease in the price received by producers,from   to   . 
C) an increase in the price paid by consumers,from   to   . 
D) a decrease in the price paid by consumers,from   to   .

Question 5

A payment that is made by the government for which no goods or services are given in return is known as

Accepted Answer

A) a public good. 
B) a transfer payment. 
C) a negative externality. 
D) a free rider. 
A) a public good. 
B) a transfer payment. 
C) a negative externality. 
D) a free rider.

Question 6

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 7

In the United States,which of the following is an example of a government-inhibited good?

Accepted Answer

A) Museums 
B) Concerts 
C) Cigarettes 
D) Sports stadiums 
A) Museums 
B) Concerts 
C) Cigarettes 
D) Sports stadiums

Question 8

Suppose that the XYZ industry produces a product that results in negative external costs to society.This information suggests that

Accepted Answer

A) resources are under-allocated to the industry. 
B) the equilibrium market price of the product includes the external costs borne by society. 
C) resources are over-allocated to the industry. 
D) at the market price,quantity demanded is less than quantity supplied. 
A) resources are under-allocated to the industry. 
B) the equilibrium market price of the product includes the external costs borne by society. 
C) resources are over-allocated to the industry. 
D) at the market price,quantity demanded is less than quantity supplied.

Question 9

Subsidies paid to the health care industry for Medicare patients are paid by

Accepted Answer

A) Congress. 
B) the Teamsters union. 
C) current taxes. 
D) the Federal Reserve. 
A) Congress. 
B) the Teamsters union. 
C) current taxes. 
D) the Federal Reserve.

Question 10

All of the following are assumptions of both market and public-sector decision making EXCEPT:

Accepted Answer

A) Decisions are based on majority rule. 
B) Decisions are motivated by individuals' self-interest. 
C) Opportunity costs exist in decisions. 
D) Choices reflect incentives faced by decision makers. 
A) Decisions are based on majority rule. 
B) Decisions are motivated by individuals' self-interest. 
C) Opportunity costs exist in decisions. 
D) Choices reflect incentives faced by decision makers.

Question 11

When misallocation of resources for production of a good results in spillover effects on third parties,there is a

Accepted Answer

A) market failure. 
B) government failure. 
C) legislative failure. 
D) productive failure. 
A) market failure. 
B) government failure. 
C) legislative failure. 
D) productive failure.

Question 12

A government-inhibited good is one that

Accepted Answer

A) the political process has determined is socially undesirable. 
B) the political process has determined is socially desirable. 
C) freely competitive markets have determined is socially desirable. 
D) we want to encourage the consumption of. 
A) the political process has determined is socially undesirable. 
B) the political process has determined is socially desirable. 
C) freely competitive markets have determined is socially desirable. 
D) we want to encourage the consumption of.

Question 13

If a corporation were forced to absorb the cost of a spillover from the production of a good,this would likely cause the supply curve for the good to

Accepted Answer

A) shift out. 
B) shift to the left. 
C) shift to the right. 
D) None of the above are correct. 
A) shift out. 
B) shift to the left. 
C) shift to the right. 
D) None of the above are correct.

Question 14

The Do-Good Company produces goods that provide benefits to society-at-large.If consumers of Do-Good's products fail to take external benefits into account,

Accepted Answer

A) the demand curve will be too far to the left. 
B) the supply curve will be too far to the left. 
C) the demand curve will be too far to the right. 
D) the supply curve will be too far to the right. 
A) the demand curve will be too far to the left. 
B) the supply curve will be too far to the left. 
C) the demand curve will be too far to the right. 
D) the supply curve will be too far to the right.

Question 15

All of the following are characteristics of public goods EXCEPT

Accepted Answer

A) Public goods can be used by more people at no additional cost. 
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. 
C) The exclusion principle. 
D) The goods are perfectly divisible. 
A) Public goods can be used by more people at no additional cost. 
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. 
C) The exclusion principle. 
D) The goods are perfectly divisible.

Question 16

An effluent fee

Accepted Answer

A) is a reward to companies using production methods that create positive externalities. 
B) is also called a pollution subsidy. 
C) gives a firm the right to pollute if it pays a tax on what it discharges. 
D) is intended to influence the market by increasing supply and decreasing price. 
A) is a reward to companies using production methods that create positive externalities. 
B) is also called a pollution subsidy. 
C) gives a firm the right to pollute if it pays a tax on what it discharges. 
D) is intended to influence the market by increasing supply and decreasing price.

Question 17

Government outlays include all of the following EXCEPT

Accepted Answer

A) dividend payments. 
B) spending on the military. 
C) electricity for the Capital Building. 
D) letterhead stationery. 
A) dividend payments. 
B) spending on the military. 
C) electricity for the Capital Building. 
D) letterhead stationery.

Question 18

Federal antitrust laws in the United States are enforced

Accepted Answer

A) solely by the Federal Trade Commission. 
B) solely by the Department of Justice. 
C) by the Department of Justice and by the Federal Trade Commission. 
D) by the Department of Commerce. 
A) solely by the Federal Trade Commission. 
B) solely by the Department of Justice. 
C) by the Department of Justice and by the Federal Trade Commission. 
D) by the Department of Commerce.

Question 19

-According to the above figure,if steel mills ignore the cost of pollution,the equilibrium quantity of steel will most likely be

Accepted Answer

A) Q1. 
B) Q2. 
C) Q2 - Q1. 
D) none of the above. 
A) Q1. 
B) Q2. 
C) Q2 - Q1. 
D) none of the above.

Question 20

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

All of the following generate positive externalities EXCEPT

Which of the following statements is TRUE?

A lighthouse that serves a dangerous coastal area is built.The lighthouse cost $500,000 to build and serves 500 ships a month.If the shipping in the area increases so that 750 ships pass by a month,the increase in additional costs of providing the light to these new ships is

In the above figure,if a Medicare subsidy that had previously been paid by the government has now been eliminated,the result will be

A payment that is made by the government for which no goods or services are given in return is known as

In the absence of government,

In the United States,which of the following is an example of a government-inhibited good?

Suppose that the XYZ industry produces a product that results in negative external costs to society.This information suggests that

Subsidies paid to the health care industry for Medicare patients are paid by

All of the following are assumptions of both market and public-sector decision making EXCEPT:

When misallocation of resources for production of a good results in spillover effects on third parties,there is a

A government-inhibited good is one that

If a corporation were forced to absorb the cost of a spillover from the production of a good,this would likely cause the supply curve for the good to

The Do-Good Company produces goods that provide benefits to society-at-large.If consumers of Do-Good's products fail to take external benefits into account,

All of the following are characteristics of public goods EXCEPT

An effluent fee

Government outlays include all of the following EXCEPT

Federal antitrust laws in the United States are enforced

-According to the above figure,if steel mills ignore the cost of pollution,the equilibrium quantity of steel will most likely be

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

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

All of the following generate positive externalities EXCEPT

Which of the following statements is TRUE?

A lighthouse that serves a dangerous coastal area is built.The lighthouse cost $500,000 to build and serves 500 ships a month.If the shipping in the area increases so that 750 ships pass by a month,the increase in additional costs of providing the light to these new ships is

In the above figure,if a Medicare subsidy that had previously been paid by the government has now been eliminated,the result will be

A payment that is made by the government for which no goods or services are given in return is known as

In the absence of government,

In the United States,which of the following is an example of a government-inhibited good?

Suppose that the XYZ industry produces a product that results in negative external costs to society.This information suggests that

Subsidies paid to the health care industry for Medicare patients are paid by

All of the following are assumptions of both market and public-sector decision making EXCEPT:

When misallocation of resources for production of a good results in spillover effects on third parties,there is a

A government-inhibited good is one that

If a corporation were forced to absorb the cost of a spillover from the production of a good,this would likely cause the supply curve for the good to

The Do-Good Company produces goods that provide benefits to society-at-large.If consumers of Do-Good's products fail to take external benefits into account,

All of the following are characteristics of public goods EXCEPT

An effluent fee

Government outlays include all of the following EXCEPT

Federal antitrust laws in the United States are enforced

-According to the above figure,if steel mills ignore the cost of pollution,the equilibrium quantity of steel will most likely be

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

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