Deck 6: The Economics of Collective Decision-Making

Question 1

In 2010, the combined expenditures of federal, state, and local governments in the United States were approximately 40 percent of gross domestic product (GDP). Approximately what percentage of GDP were government expenditures in 1930?

A)9 percent
B)19 percent
C)29 percent
D)39 percent

Answer 1

A

Question 2

Direct income transfers account for approximately what percentage of total government spending?

A)10 percent
B)30 percent
C)50 percent
D)60 percent

Answer 2

C

Question 3

When goods are produced privately, but the cost of their purchase is paid for by the taxpayer or some other third party,

A)consumers have a strong incentive to search out those firms offering them the best deal.
B)private producers of such goods will have little incentive to control costs and provide them at low prices.
C)goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs.
D)the invisible hand will direct consumers and producers toward an efficient level of output.

Answer 3

B

Question 4

Which of the following explains why managers of government agencies have little incentive to achieve operational efficiency?

A)Public-sector managers need not fear bankruptcy when operational efficiency is not achieved.
B)Public-sector managers seldom receive personal benefits if they find ways to improve the efficiency of their operations.
C)Public-sector agencies typically do not face competition.
D)All of the above explain why government agencies have little incentive to be efficient.

Question 5

Special-interest programs are highly attractive to vote-seeking politicians because

A)these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace.
B)members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them.
C)low-income recipients are the primary beneficiaries of special-interest programs.
D)members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.

Question 6

When voters pay taxes in proportion to the benefits they receive from government projects,

A)efficient projects will tend to be opposed by a majority of voters.
B)inefficient projects will often be favored by a majority of voters.
C)projects that are efficient will tend to be favored by an overwhelming majority of voters.
D)democratic political decision making can be expected to work poorly.

Question 7

In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately

A)14 percent of GDP.
B)24 percent of GDP.
C)35 percent of GDP.
D)44 percent of GDP.

Question 8

Of all government spending in the United States, what amount occurs at the federal level?

A)less than 10 percent
B)about half
C)about three-fifths
D)more than 90 percent

Question 9

Combined federal, state, and local government expenditures in the United States were approximately 9 percent of the gross domestic product (GDP) in 1930. How large were government expenditures as a share of GDP in 2010?

A)approximately 10 percent
B)approximately 20 percent
C)approximately 30 percent
D)approximately 40 percent

Question 10

Which of the following provides the best summary of the basic idea of public choice analysis?

A)Public choice analysis applies the principles of economics to political science topics.
B)Public choice analysis takes the principles of political science and applies them to the traditional topics of economics.
C)Public choice analysis uses the principle of majority rule to determine the efficiency of an action.
D)Public choice analysis indicates there is a sharp distinction between economic and political topics.

Question 11

Between 1930 and 1980, government expenditures as a percent of GDP in the United States

A)more than tripled.
B)remained constant at 10 percent.
C)declined from 30 percent to 20 percent.
D)increased from 30 percent to 40 percent.

Question 12

Current tax rates are insufficient to finance the benefits promised by both the Social Security and Medicare programs. Are these unfunded promises surprising according to economic theory?

A)Yes, political representatives have a strong incentive to levy taxes that are sufficient to cover the cost of all programs they favor.
B)No, the unfunded promises reflect the shortsighted nature of the political process.
C)Yes, political representatives generally favor balancing the government budget because this is best for the economy.
D)No, even though debt financing often makes sense, politicians are reluctant to use it because it will damage their chances of being reelected.

Question 13

The rational-ignorance effect is a result of

A)externalities that lead to an excess supply of information.
B)the limited incentive of the news media to cover political campaigns.
C)the expectation of individual voters that their vote will not be decisive.
D)the lack of a college education on the part of most voters in the United States.

Question 14

Most voters will likely be concerned with

A)most issues since most issues have some impact, however slight, on each citizen.
B)only a few special issues (those that exert the most impact on the voters' personal welfare).
C)most issues since information on most issues can be obtained at a low cost.
D)the views of a particular political candidate on all issues.

Question 15

Public choice theory suggests politicians will be most likely to favor redistribution of income from

A)the rich to the poor.
B)unorganized taxpayers to well-organized interest groups.
C)middle-income taxpayers to both the rich and the poor.
D)well-organized businesses and labor groups to consumers.

Question 16

Which of the following is an example of a transfer payment?

A)wages paid to military personnel
B)benefits paid to Social Security recipients
C)purchase of aircraft by the Department of Defense
D)payments made to a contractor for construction of a highway

Question 17

Which of the following is true regarding government expenditures in the United States?

A)As a share of GDP, government expenditures were higher in 1950 than 2010.
B)Government expenditures were more than 30 percent of GDP in 1930.
C)Government expenditures as a share of GDP grew rapidly between 1930 and 1980.
D)In 2010, government expenditures at all levels summed to approximately 10 percent of GDP.

Question 18

Which of the following is accurate regarding government expenditures in the United States?

A)The federal government spends considerably more than state and local governments combined.
B)The federal government spends more than local governments but less than state governments.
C)Local governments spend more than state governments, which in turn, spend more than the federal government.
D)Since 1930, total government expenditures as a share of GDP have declined.

Question 19

Transfer payments are

A)payments made to individuals who are employed by the government.
B)payments made to individuals who provide goods and services to the government.
C)transfers of income from taxpayers to recipients who do not provide current goods and services for the payments.
D)omitted from the government expenditure figures.

Question 20

The major categories of federal government spending are

A)health care, national defense, Social Security, and other income transfers.
B)law enforcement, environmental protection, and national defense.
C)public education, garbage collection, and public parks.
D)health care, public education, and highways.

Question 21

In 2010, government income transfers redistributed what percentage of national income?

A)1.5 percent
B)9.5 percent
C)19.5 percent
D)25.5 percent

Question 22

Public choice theory assumes each voter will tend to support the political candidate who offers

A)programs with the largest benefits to society.
B)the highest potential for being a good leader in times of war.
C)programs that create the most equal distribution of income.
D)to provide the voter with the most personal benefits at the least personal cost.

Question 23

Which one of the following is a major difference between market and collective action through government?

A)Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices.
B)Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively.
C)Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government.
D)In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector.

Question 24

Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?

A)Alfred Marshall
B)John Maynard Keynes
C)James Buchanan
D)Milton Friedman

Question 25

In a representative democracy, government action results from the

A)choices of voters.
B)legislative decisions by politicians.
C)political action of organized interest groups.
D)complex interaction of all of the above.

Question 26

Joella is a third-grade public school teacher who doesn't own a car and uses public transportation. According to public choice theory, which of the following four politicians for a public office would Joella be most likely to vote for in the upcoming election?

A)Politician A proposes increasing the property tax on personal automobiles and using the money to increase teacher salaries by 10 percent.
B)Politician B proposes an across-the-board increase in state income tax rates and using the money to increase the benefits paid to unemployed workers.
C)Politician C proposes increasing the property tax on personal automobiles and using the money to increase the benefits paid to unemployed workers.
D)Politician D proposes an across-the-board increase in state income tax rates and using the money to improve the highway system.

Question 27

According to the economic way of thinking, personal benefits and costs influence the actions of

A)consumers in the private sector but not voters in the public sector.
B)producers in the private sector but not politicians in the public sector.
C)taxpayers but not recipients of government-provided goods and services.
D)consumers, producers, voters, and politicians in both the private and the public sectors.

Question 28

The methodology of public choice analysis

A)develops a logically consistent theory based on how individual actors (such as voters, politicians, and bureaucrats) respond to incentives.
B)assumes that all decisions made by individual actors in the public sector are done with the public interest in mind, rather than their private interests.
C)assumes that individuals generally react to the incentives they face when making choices in the private sector but not in the public sector.
D)focuses on the development of a single theory of government as a whole rather than on analyzing the choices made by individual agents in the public sector.

Question 29

Which of the following is true?

A)Competitive behavior is present in the market sector but not in the public sector.
B)Because candidates for public office represent a bundle of views, there is more ability for individuals to make their preferences count on specific issues than in the market sector.
C)When decisions are made democratically, the economic and political power of all individuals will be equal unlike in the market sector.
D)The reality of the aggregate consumption-aggregate payment link imposed by scarcity is present in both the market and public sectors.

Question 30

Economic theory indicates that the behavior of

A)government employees differs from the behavior of employees in the private sector because government employees generally disregard their own personal self-interest when making decisions.
B)elected public officials differs from the behavior of all other individuals in society because they are not influenced by private interests.
C)individuals when they make decisions about who to vote for is very different from the behavior of these same individuals when they make other types of choices.
D)voters, government employees, and public officials is best understood by applying the same basic principle we use to predict the behavior of people in the private sector--that incentives matter.

Question 31

The branch of economics that applies the principles and methodology of economics to the operation of the political process is known as

A)private choice analysis.
B)public choice analysis.
C)government operations analysis.
D)policy preference analysis.

Question 32

At the most basic level, the distinguishing characteristic of government that makes it different from private firms is its ability to

A)use coercive force against adults to modify their behavior or force them to pay for a good or service.
B)direct resources in a manner that serves the public interest rather than the private interest of individuals.
C)produce goods and services that people value.
D)escape the constraints imposed by scarcity.

Question 33

Public choice analysis suggests that voters considering whether to vote for a candidate will ask,

A)"What will the candidate do that will promote the general welfare of society?"
B)"What will the candidate do that will benefit me, and how much will it cost me?"
C)"Will the candidate pursue only programs that increase economic efficiency?"
D)"What will the candidate do that will benefit everyone in the country?"

Question 34

Measured as a share of national income, government expenditures on income transfers during the last 70 years have

A)grown rapidly.
B)declined substantially.
C)been virtually unchanged.
D)increased throughout much of that period, but they have declined substantially since 1980.

Question 35

When analyzing public sector decision making, economic theory assumes voters, politicians, and government officials will

A)respond to changes in personal benefits and costs when making public sector choices.
B)always pursue the public interest even when it conflicts with their private interests.
C)generally ignore the personal costs and benefits associated with their choices.
D)make decisions that seek to maximize the amount of benefits created for society as a whole.

Question 36

Public choice theory assumes voters, politicians, and other individuals in the public sector are largely motivated by

A)a desire to promote the general welfare.
B)a desire to meet the conditions of economic efficiency for the economy as a whole.
C)altruism or the good of the public as a whole.
D)personal self-interest.

Question 37

Public choice theory indicates that the behavior of people in government

A)differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest.
B)differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests.
C)is the same as people in the private sector only if decisions are made by majority vote.
D)is best understood by applying the same principles we use to predict the behavior of people in the private sector.

Question 38

The branch of economics that attempts to understand the outcomes observed in the public sector by examining the incentives faced by the individual actors involved (such as voters, politicians, and bureaucrats) is known as

A)private choice analysis.
B)public choice analysis.
C)government operations analysis.
D)incentive analysis.

Question 39

Public choice analysis

A)assumes individuals in the public sector seek to serve the public interest rather than their own personal interests.
B)is the study of the decision making of individual actors (such as voters, politicians, and bureaucrats) in the public sector.
C)suggests that individual voters have a greater incentive to become informed when making choices among political candidates than when making choices about the products they consume.
D)finds that the individuals managing government agencies generally have a much stronger incentive to be efficient than do individuals managing private businesses.

Question 40

As methods of economic organization, the market and the public sector are similar in which of the following ways?

A)Income and power are distributed equally in both sectors.
B)In both sectors, economic activity is undertaken only when it satisfies the criterion for economic efficiency.
C)In both sectors, economic exchange is completely voluntary.
D)Someone must cover the cost associated with the provision of scarce goods in both sectors.

Question 41

Despite being a college graduate, Jack Adams cannot name any of his representatives in Congress and he has no idea which issues are being debated and voted on this week in Congress. According to public choice analysis, Jack is

A)irrational.
B)considering only the welfare of society and not his own personal interests.
C)not intelligent enough to understand the issues.
D)making a rational personal choice because knowing these things gives him little personal benefit.

Question 42

A politician may be considered an entrepreneur in the sense that

A)he is always open to bribery.
B)identical personal characteristics are necessary for success in politics and in business.
C)the successful politician discovers and offers voters political goods when voter demand is strong for him.
D)like the businessman, the politician selfishly attempts to gain at the expense of his customers.

Question 43

Which of the following is true?

A)When the government undertakes an activity, we can be assured that all voters will gain.
B)If a government activity is favored by most citizens, it must be productive.
C)If most voters oppose a government activity, it must be counterproductive.
D)When voters pay in proportion to benefits received, all voters will gain if the government activity is productive.

Question 44

Senator Blacklung represents a state that grows a significant amount of tobacco. Not only do many of his constituents work for businesses in this industry, but the tobacco firms also make generous contributions to his reelection campaign. According to public choice theory, which of the following bills would Senator Blacklung be most likely to support?

A)a bill proposing an increase in the tax on cigarettes to fund urban renewal programs across the nation
B)a bill that would provide substantial subsidies for tobacco growers
C)a bill proposing increased funding for a national antismoking awareness campaign financed by an increase in the tax on cigarettes
D)a bill that would prohibit senators from accepting campaign contributions from firms who are involved in the production or sale of tobacco products

Question 45

The fact that voters perceive their votes as unlikely to actually change the outcome of an election causes

A)voters to have little incentive to become informed about candidates and political issues.
B)voters to spend a great deal of effort becoming informed about candidates and political issues.
C)the percent of people who actually turn out to cast a vote on election day to be very high.
D)people to be extremely reluctant to "waste" their votes on a third-party candidate.

Question 46

People who spend more time and effort investigating the advantages and disadvantages of different automobile models when they go to purchase one than they do investigating the strengths and weaknesses of presidential candidates are saying, in effect, that

A)a good car is more important to their well-being than a good president.
B)they expect to use the information on the merits of alternative cars to greater personal advantage than they could information on the merits of alternative presidential candidates.
C)they are irrational, because the choice of a president is obviously far more important than the choice of a car.
D)they do not think it matters who is elected president.

Question 47

Public choice theory indicates competitive forces provide a politician with a strong incentive to offer voters a bundle of political goods that she believes

A)is best for the economic and political situations the country faces.
B)will most likely clear the legislative process.
C)will increase the welfare of society.
D)will increase her chances of winning elections.

Question 48

Which of the following is true of government activities under a system of representative democracy?

A)If a majority favors an activity, it must be productive.
B)If a majority opposes an activity, it must be counterproductive.
C)When voters pay in proportion to benefits received, productive activities undertaken by the government will be favored by an overwhelming majority of voters.
D)When voters pay in proportion to benefits received, productive activities will generally be defeated under a majority rule vote.

Question 49

Public choice theory indicates someone who spends more time evaluating which tennis racket to buy than deciding which U.S. Senate candidate to support

A)is behaving irrationally.
B)is behaving rationally, given the structure of incentives confronted.
C)will likely be responsible for electing the wrong senator.
D)is failing to maximize his own personal utility.

Question 50

Senator Dogood is pushing for the construction of a new military base in his state even though, from the standpoint of national security, it is clear that there are better places to locate the new military base. Economic theory would suggest that Senator Dogood is

A)acting irrationally; he must not know that the base would be better located in a different state.
B)acting rationally; he realizes that constructing the base in his state will increase his chances of getting reelected.
C)acting rationally if the country is currently at war but is acting irrationally if the country is not at war.
D)trying to do what is best for the country.

Question 51

Which of the following is true?

A)To remain in office, a politician must try to enact policies that gain him votes for his reelection and increase the support coming from contributors.
B)A politician always attempts to pursue policies that are good for society even if they are strongly opposed by many of her constituents or contributors.
C)Politicians generally place more weight on how their decisions affect future costs and benefits than on how they affect present costs and benefits.
D)The value of being in office is so low that most political candidates spend very little on campaigns to try to win (or keep) elected office.

Question 52

Economists refer to the lack of incentive that voters have to search for and obtain information to help make better political choices as the

A)shortsightedness effect.
B)public-interest effect.
C)free rider problem.
D)rational-ignorance effect.

Question 53

When the tax to fund a government project is allocated among voters in proportion to the benefits they receive from the project,

A)productive (efficient) projects will tend to be opposed by a majority of voters.
B)counterproductive (inefficient) projects will often be favored by a majority of voters.
C)projects that are productive (efficient) will tend to be favored by an overwhelming majority of voters.
D)democratic political decision making can be expected to work poorly.

Question 54

Economic analysis suggests that bureaucrats and public-sector managers have a strong incentive to

A)make sure that their budgets are as small as possible so more funds will be available for other government programs.
B)expand their budgets to sizes beyond what would be considered economically efficient.
C)ensure that their budgets are exactly the size that would be considered economically efficient.
D)economize on their spending and return unspent funds to the general treasury.

Question 55

According to the shortsightedness effect, politicians tend to favor projects with

A)short-run benefits and short-run costs.
B)short-run benefits and long-run costs.
C)long-run benefits and short-run costs.
D)long-run benefits and long-run costs.

Question 56

Payments that users (consumers) are required to make if they want to receive certain services provided by the government are called

A)tax deductions.
B)transfer payments.
C)user charges.
D)sales taxes.

Question 57

John Smith is a typical citizen. Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate. This view is

A)false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer.
B)false; Smith will tend to choose more carefully when he makes public choices than when he makes private choices.
C)uncertain; it would be true if, and only if, Smith's spending on personal computers exceeds his tax bill.
D)true; since Smith can decide what computer to buy, but his individual vote is very unlikely to decide the outcome of a congressional election, he has more incentive to inform himself about the computer than the congressional election.

Question 58

The rational-ignorance effect refers to the

A)lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election.
B)fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters.
C)lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them.
D)problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues.

Question 59

Ginny is the owner of a small business, and she is 35 years old. She doesn't smoke cigarettes, and she often spends her weekends with her family camping at the local Greentree state park. According to public choice theory, which of the following four politicians for a public office would Ginny be most likely to vote for in the upcoming election?

A)Politician A proposes increasing the tax on small businesses and using the money to provide additional benefits for the elderly.
B)Politician B proposes increasing the tax on small businesses and using the money to improve the camping facilities at Greentree state park.
C)Politician C proposes increasing the excise tax on cigarettes and using the money to improve the camping facilities at Greentree state park.
D)Politician D proposes increasing the excise tax on cigarettes and using the money to provide additional benefits for the elderly.

Question 60

Public choice analysis suggests that the primary motivating factor for politicians will be finding the policies that are most likely to

A)get them reelected.
B)improve economic efficiency.
C)improve the welfare of society as a whole.
D)anger the interest groups that provide substantial contributions to their campaigns.

Question 61

Government action will often result in the counterproductive use of resources because

A)there is often a conflict between winning political elections and adoption of only productive programs.
B)many politicians are not interested in how their legislative votes will influence their chances of winning future elections.
C)politicians are often unwilling to listen to interest groups that have specialized knowledge.
D)voter participation is low; if more people voted, the political process would be more efficient.

Question 62

A special-interest issue is one that

A)allocates the cost of the activity in accordance with the benefits received.
B)benefits a small, well-organized interest group at the expense of taxpayers or consumers.
C)benefits everyone and imposes a cost on everyone.
D)benefits a small, well-organized interest group but makes that group pay for the cost of the program.

Question 63

According to economic theory, it is often rational for a politician to support special interest groups at the expense of unorganized, widely dispersed groups (for example, taxpayers or consumers)

A)only when the gains that accrue to the special interest group exceed the costs imposed on other voters.
B)when nonspecial-interest voters are unconcerned or uninformed about the issue, and campaign funds are readily available from the special interest group.
C)only if the government action is socially efficient.
D)only if the government action will reduce the monopoly power of business or labor and, thereby, lead to an improvement in the general welfare of consumers.

Question 64

Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs

A)based on careful analysis of benefits relative to cost.
B)designed to redistribute income from the rich to the poor.
C)that reflect the political attractiveness of special-interest issues.
D)that promote the general welfare.

Question 65

For activities in which the benefits are concentrated and the costs widespread, governments are likely to undertake

A)too little of these activities relative to what would be efficient.
B)too much of these activities relative to what would be efficient.
C)exactly the amount of these activities that would be efficient.
D)none of these activities.

Question 66

According to the special-interest effect, which of the following groups is least likely to have a significant influence on the political process?

A)the American Federation of Labor
B)the National Association of Manufacturers
C)nonunion employees
D)the American Medical Association

Question 67

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

A)rejection of productive activities and acceptance of unproductive activities.
B)acceptance of both productive and unproductive activities.
C)rejection of both productive and unproductive activities.
D)acceptance of productive activities and rejection of unproductive activities.

Question 68

Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports?

A)Without the farm subsidies, food shortages would result.
B)Subsidies promote the efficient use of agricultural resources.
C)Agricultural interests seek a redistribution of income favoring themselves.
D)The price support programs reduce food costs, which helps the poor.

Question 69

Special-interest legislation is characterized by

A)concentrated costs and concentrated benefits
B)concentrated benefits and widespread costs
C)widespread benefits and widespread costs
D)widespread benefits and concentrated costs
E)zero costs

Question 70

In which case is the political process most likely to result in the acceptance of efficient projects and rejection of inefficient projects?

A)The benefits are highly concentrated, and costs are widespread among voters.
B)The costs are highly concentrated, and the benefits are widespread among voters.
C)Both the benefits and costs are widespread among voters.
D)The benefits accrue primarily in the future, while the costs are more visible during the current period.

Question 71

Which of the following is a distinguishing characteristic of a user charge?

A)Persons pay roughly in proportion to the extent that they use the good or service.
B)Persons with high incomes pay a larger amount than persons with lower incomes for the same good or service.
C)Persons with high incomes pay a larger percentage of their income than persons with lower incomes for the same good or service.
D)Persons with high incomes pay a smaller percentage of their income than persons with lower incomes for the same good or service.

Question 72

A local government operates a city water system and finances it through fees that it charges to water consumers. This type of financing is an example of a

A)head tax.
B)excise fee.
C)progressive tax.
D)user charge.

Question 73

An issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others is called a

A)special-interest issue.
B)minority application.
C)commons policy.
D)national service.

Question 74

In which of the following situations is the political process likely to result in the inefficient and wasteful use of resources?

A)when the benefits are concentrated and the costs are concentrated
B)when the benefits are concentrated and the costs widespread
C)when the benefits are widespread and the costs are concentrated
D)when the benefits are widespread and the costs are widespread

Question 75

A local government operates a city recreation center with a pool and tennis courts. The center is financed through $50 annual membership fees (required for members to use it). This type of financing is an example of a

A)head tax.
B)excise fee.
C)user charge.
D)progressive tax.

Question 76

When politicians support policies that benefit small interest groups, such as farmers, at the expense of unorganized, widely dispersed groups, for example, taxpayers or consumers, this is a reflection of the

A)tragedy of interest.
B)special-interest effect.
C)unorganized interest effect.
D)shortsightedness effect.

Question 77

If a federal agency requested funds to build a dam on an Idaho river to irrigate nearby farmland used for growing potatoes, the most active support for the project probably would come from

A)potato farmers who own land that wouldn't be irrigated by the project.
B)taxpayers who would pay for the project.
C)consumers of potatoes who might benefit from an expansion in supply and slightly lower potato prices.
D)potato farmers who own the land to be irrigated.

Question 78

Public choice theory indicates that representative government yields outcomes more consistent with economic efficiency when a close relationship exists between the benefits received and the costs borne by each voter. Which of the following methods of financing a government program will most likely result in a close relationship between voter benefits and costs?

A)progressive income tax
B)retail sales tax
C)property tax
D)user charges

Question 79

Which of the following is the most likely explanation for the imposition of a price floor in the market for corn?

A)Policymakers have studied the effects of the price floor carefully and they recognize that the price floor will improve the efficiency of resource use.
B)Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into enacting the price floor.
C)Buyers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.
D)Sellers of corn, recognizing that the price floor is good for them, have pressured policy makers into enacting the price floor.

Question 80

In which one of the following situations is the political process most likely to result in both the acceptance of efficient (productive) programs and the rejection of inefficient (counterproductive) political activities?

A)The people who benefit from a government program pay the costs of the program roughly in proportion to the benefits that each receives.
B)The benefits are highly concentrated, and the costs are widespread among voters.
C)The costs are highly concentrated, and the benefits are widespread among voters.
D)The benefits accrue primarily in the future, while the costs are more visible during the current period.