Deck 16: Public Goods and Public Choice

Question 1

Exhibit 16.1

Refer to Exhibit 16.1.In Box B,a good that is nonrival and exclusive is _____

A)private.
B)a natural monopoly.
C)open-access.
D)public.
E)a free-rider.

Answer 1

B

Question 2

A good that is neither rival nor exclusive is called a(n)_____

A)private good.
B)public good.
C)quasi-private good.
D)external good.
E)open-access good.

Answer 2

B

Question 3

Public goods are _____

A)rival and nonexclusive.
B)exclusive and nonrival.
C)rival and exclusive.
D)nonrival and exclusive.
E)nonrival and nonexclusive.

Answer 3

E

Question 4

Uncongested goods are a natural monopoly and are _____

A)rival and nonexclusive.
B)exclusive and nonrival.
C)rival and exclusive.
D)nonrival and exclusive.
E)nonrival and nonexclusive.

Question 5

A golf course or a swimming pool in a resort that is not crowded is an example of a(n)_____

A)private good.
B)natural monopoly.
C)open-access good.
D)public good.
E)quasi-private good.

Question 6

A good that is a natural monopoly is _____

A)rival and nonexclusive.
B)exclusive and nonrival.
C)rival and exclusive.
D)nonrival and exclusive.
E)nonrival and nonexclusive.

Question 7

Private goods are _____

A)rival and nonexclusive.
B)exclusive and nonrival.
C)rival and exclusive.
D)nonrival and exclusive.
E)nonrival and nonexclusive.

Question 8

Exhibit 16.1

Refer to Exhibit 16.1.In Box C,a good that is rival and nonexclusive is _____

A)private.
B)a natural monopoly.
C)open-access.
D)public.
E)a free-rider.

Question 9

Exhibit 16.1

Refer to Exhibit 16.1.In Box D,a good that is nonrival and nonexclusive is _____

A)private.
B)a natural monopoly.
C)open-access.
D)public.
E)a free-rider.

Question 10

A good that is both rival and exclusive is called a(n)_____

A)private good.
B)public good.
C)quasi-private good.
D)external good.
E)open-access good.

Question 11

If taxpayers can enjoy mosquito abatement without paying for it,they tend to understate their true valuation of mosquito control measures.This is an example of _____

A)a natural monopoly.
B)the median-voter model.
C)an open-access good.
D)the free-rider problem.
E)irrational ignorance.

Question 12

Once congestion sets in,natural monopolies morph into goods that are _____

A)rival and nonexclusive.
B)exclusive and nonrival.
C)rival and exclusive.
D)nonrival and exclusive.
E)nonrival and nonexclusive.

Question 13

Which of the following is true of the market demand for a public good?

A)The market demand curve for a public good is the vertical sum of individual consumers' demand curves.
B)The market demand curve for a public good is the horizontal sum of individual consumers' demand curves.
C)The efficient quantity of a public good produced occurs where the market demand curve intersects the market supply curve.
D)The market demand curve for a public good is the sum of the quantities demanded by each consumer at a given income level.
E)The efficient quantity of a public good produced occurs where the marginal utility from the last dollar spent on the good is zero.

Question 14

The efficient quantity of a public good produced is _____

A)determined by the intersection of the market demand curve and the marginal cost curve.
B)achieved where the sum of marginal valuations equals the sum of marginal costs.
C)determined by the intersection of the market demand and market supply curves.
D)achieved where marginal revenue product equals marginal factor cost.
E)achieved at the minimum point of the average total cost curve.

Question 15

Exhibit 16.1

Refer to Exhibit 16.1.In Box A,a good that is rival and exclusive is _____

A)private.
B)a natural monopoly.
C)open-access.
D)public.
E)a free-rider.

Question 16

A good that is rival but nonexclusive is called a(n)_____

A)private good.
B)public good.
C)natural monopoly.
D)merit good.
E)open-access good.

Question 17

Goods that are nonexclusive are _____

A)cheap.
B)expensive.
C)low quality.
D)high quality.
E)free.

Question 18

A good that is open-access is _____

A)rival and nonexclusive.
B)exclusive and nonrival.
C)rival and exclusive.
D)nonrival and exclusive.
E)nonrival and nonexclusive.

Question 19

Which of the following is an example of a good that is nonrival and nonexclusive in consumption?

A)televisions
B)haircuts
C)pizza
D)national defense
E)tickets to a rock concert

Question 20

A good that is nonrival but exclusive is called a(n)_____

A)luxury good.
B)public good.
C)natural monopoly.
D)inferior good.
E)open-access good.

Question 21

Sally,Kelly,and Debbie are roommates deciding on how many cats they want to keep.Sally prefers three cats to two cats and two cats to one cat.Kelly prefers two cats to one cat and one cat to three cats.Debbie prefers one cat to two cats and two cats to three cats.If they decide by majority vote,they will get _____.

A)four cats
B)one cat
C)two cats
D)three cats
E)five cats

Question 22

As a result of voters' rational ignorance,_____

A)the outcome of majority rule focuses on the preferences of the median voter.
B)voters elect representatives, who make public choices that reflect constituents' views.
C)political candidates try to get elected by appealing to the median voter.
D)special interests often dominate legislation.
E)less production gets reported.

Question 23

Many eligible voters who do vote do not keep track of the performance records of candidates for public office.This is because _____

A)they try to evade taxes by shifting to the underground economy.
B)they try to reap the benefits of consuming public goods without paying for them.
C)they adopt a stance of rational ignorance.
D)political candidates try to get elected by appealing to the median voter.
E)voters elect representatives, who make public choices that reflect constituents' views.

Question 24

Public choice theory suggests that political candidates try to get elected by _____

A)appealing to conservatives.
B)appealing to liberals.
C)appealing to senior citizens.
D)appealing to the median voter.
E)lowering taxes.

Question 25

Under representative democracy,_____

A)the preferences of a median voter are overridden by the outcome of majority rule.
B)people vote directly on issues related to the choices made in the public sector.
C)representatives make public choices that reflect constituents' views.
D)representatives are always a part of the losing side.
E)each individual gets whatever amount he or she is willing and able to buy.

Question 26

Generally,people are more satisfied with private market outcomes than with public voting outcomes because _____

A)each consumer in the private market can choose the quantity he or she desires.
B)the marginal utility of the last unit of private good is always positive.
C)the prices of private goods are lower than those of public goods.
D)the utility derived from the consumption of private goods is higher than that from public goods.
E)there are too many choices to make in the public sector.

Question 27

Rational ignorance suggests that voters may not spend much time examining candidates before an election because _____

A)they do not have a special interest in legislation.
B)each voter has virtually no chance of affecting the outcome of the election.
C)only the preferences of the median voter are counted in elections.
D)candidates are chosen by the Electoral College.
E)it is easy to determine which candidate is better.

Question 28

The median-voter model attempts to explain why _____

A)law partners seldom agree on the division of costs.
B)the preferences of the typical voter often dominate other choices in a democracy.
C)democracies evolve into dictatorships.
D)people are largely oblivious to most public choices.
E)resources employed to persuade government to redistribute income and wealth to special interests are unproductive.

Question 29

In a democratic society,the preferences of _____ will often dominate decisions made by direct majority voting.

A)elected government representatives
B)special-interest groups
C)rent seekers
D)senior citizens
E)the median voter

Question 30

The American Association of Retired Persons (AARP)provides checklists that summarize the voting and attendance records of legislators.Which of the following is true?

A)If AARP's members were rational, AARP would not have to do this.
B)This policy is intended to seek special favors from the governmental bureaucracy.
C)This policy is intended to reduce voters' rational ignorance by decreasing the cost of information.
D)This policy is intended to maximize political support for AARP among non-members.
E)This policy is intended to track all market activity that goes unreported either to evade taxes or because the activity itself is illegal.

Question 31

Which of the following is true of the median-voter model?

A)Public choices determined by the median voter are not optimal.
B)The median voter is always a part of the losing side.
C)Under certain conditions, the median voter determines which outcome wins.
D)Public choices determined by the median voter are not rational.
E)Public choices determined by the median voter ensure that each individual gets whatever amount he or she is willing and able to buy.

Question 32

Under which of the following circumstances would a voter adopt a stance of rational ignorance instead of choosing to be informed of the public choices at hand in an election?

A)when the benefit consumers anticipate from becoming informed exceeds the anticipated cost of doing so
B)when the voters have a special interest in the legislation
C)when information and the time required to acquire and digest it are scarce
D)when the median voter in an electorate determines public choices
E)when political candidates try to get elected by appealing to the median voter

Question 33

In a direct majority-rule vote,_____

A)each individual gets whatever amount he or she is willing and able to buy.
B)people vote directly on issues related to choices made in the public sector.
C)only the median voter is completely satisfied.
D)the choices made by the other voters dominate the choice made by the median voter.
E)only the median voter is dissatisfied.

Question 34

The questions of what type of public goods to produce and how much to produce are resolved _____

A)in product markets.
B)in resource markets.
C)only by central planners.
D)through public choices.
E)through referenda.

Question 35

Suppose a citizen concludes that he has had enough of big government and decides to launch a personal campaign to expose the big spenders in Congress.In such a case,_____

A)he is likely to have his taxes reduced dramatically.
B)his action is not likely to affect public choices.
C)he is likely to benefit from public goods without paying for them.
D)he is likely to be elected to public office by other voters.
E)his action will get the support of many special-interest groups.

Question 36

If voters realize that they have but a tiny possibility of influencing public choices,they _____

A)adopt a stance of rational ignorance.
B)prefer direct democracy over representative democracy.
C)engage in rent-seeking activities.
D)vote with their feet.
E)tend to understate their true valuation of public goods.

Question 37

Public choices are government decisions about _____

A)public goods only.
B)taxes only.
C)public goods and taxes.
D)private goods.
E)private services.

Question 38

If elected officials are assumed to be driven by rational self-interest,they are likely to _____

A)best serve the public interest.
B)maximize their hours worked.
C)maximize their political support.
D)adopt a stance of rational ignorance.
E)have a profit incentive to act on consumer feedback.

Question 39

Suppose the government of Marina decides to pay for public radio by taxing people on the basis of the number of hours they listen to it.In order to determine the tax,it decides to conduct a survey.However,if the survey is based on voluntary self-reporting,which of the following is likely to happen?

A)People who report many hours of listening may pay a small proportion of their income in public radio tax.
B)Individuals with higher incomes may pay lower taxes than individuals with lower incomes.
C)Many individuals may understate the number of hours they listen to public radio to government in order to reduce their tax bill.
D)Many individuals may overstate the number of hours they listen to public radio to government in order to receive a lower tax bill.
E)In order to evade taxes, individuals may shift from the formal, reported economy to an underground, "off the books" economy.

Question 40

As information and the time required to acquire and digest it are scarce,_____

A)consumers concentrate on private choices rather than on public choices.
B)consumers concentrate on public choices rather than on private choices.
C)it is irrational for consumers to remain ignorant of the costs and benefits of government proposals.
D)voters elect representatives, who always make public choices that reflect constituents' views.
E)voters have a special economic interest in making informed decisions about public choices.

Question 41

Suppose the legislature of the Democratic Republic of Marina proposes a 10 percent national income tax that would be used to fund universal health care,literacy,and access to the justice system for all citizens.This legislation is an example of _____

A)traditional public-goods legislation.
B)special-interest legislation.
C)competing-interest legislation.
D)populist legislation.
E)quasi legislation.

Question 42

An example of traditional public-goods legislation is _____

A)price supports for dairy products.
B)a system of justice.
C)a tattoo removal program in San Luis Obispo, California.
D)tort reform.
E)a labor union issue.

Question 43

Which of the following is an example of traditional public-goods legislation?

A)funding for cancer research
B)funding for the construction of a statue in Alabama
C)the provision of subsidies to wheat producers
D)dealing with labor union issues
E)the implementation of tort reforms

Question 44

Consumers concentrate on private choices rather than public choices because _____

A)information and the time required to acquire and digest it are scarce.
B)information and the time required to acquire and digest it are abundant.
C)information is scarce but the time required to acquire and digest it is abundant.
D)information is abundant but the time required to acquire and digest it is scarce.
E)people make public decisions based on emotions rather than rational analyses.

Question 45

Rational ignorance occurs when _____

A)voters find the cost of understanding a specific issue greater than the expected benefit from doing so.
B)legislation generates large benefits for a few people but imposes costs on many people.
C)the preferences of the median voter dominate public choices.
D)individuals or firms attempt to obtain favorable treatment from government officials.
E)people make public decisions based on emotions rather than rational analyses.

Question 46

Susie spends more of October thinking about her Halloween costume than she spends thinking about a proposed law that will be on the November ballot.Which of the following is true?

A)This behavior is rational if she expects a greater benefit from the costume than from any possible effect her vote could have on the proposed law.
B)This behavior is rational if she is planning to spend the time from Halloween to Election Day thinking about the law.
C)This behavior is not rational because the law is more important than the costume.
D)This behavior is not rational because Susie is too ignorant to fully understand the law.
E)This behavior is rational because the legislation involves concentrated benefits and concentrated costs.

Question 47

A public good,such as a community's emergency warning sirens,typically _____

A)imposes benefits on only a few individuals but imposes costs on many people.
B)imposes both benefits and costs on relatively few individuals.
C)imposes benefits on many individuals but imposes costs on relatively few people.
D)imposes both benefits and costs on many individuals.
E)imposes costs on individuals only when logrolling is prevalent in the government.

Question 48

Rather than make decisions by direct referenda,voters elect representatives,who,at least in theory,_____

A)make public choices that reflect constituents' views.
B)impose costs on many people.
C)dominate public choices.
D)attempt to obtain favorable treatment from firms.
E)make public decisions based on emotions rather than rational analyses.

Question 49

To maximize political support,elected officials may cater to _____

A)public interest rather than serve the special interests.
B)special interests rather than serve the public interest.
C)taxpayers rather than serve the retirees.
D)retirees rather than serve the taxpayer.
E)journalists.

Question 50

Political candidates frequently try to get elected by appealing to _____

A)the median voter.
B)taxpayers.
C)other political candidates.
D)private markets.
E)labor unions.

Question 51

Legislation that benefits a narrow geographical interest is called _____

A)competing-interest legislation.
B)pork-barrel spending.
C)populist legislation.
D)public-good spending.
E)quasi legislation.

Question 52

Elected officials try to maximize their _____

A)political support.
B)funding.
C)spending.
D)election promises.
E)utility.

Question 53

The _____ is the one whose preferences lie in the middle of all voters' preferences.

A)median voter
B)taxpayer
C)political candidate
D)private market
E)labor union

Question 54

The _____ predicts that under certain conditions,the preference of the median,or middle,voter will dominate other choices.

A)median-voter model
B)taxpayer
C)political candidate
D)private market
E)labor union

Question 55

Traditional public goods legislation is _____

A)legislation involving widespread benefits and widespread costs.
B)legislation with widespread benefits but concentrated costs.
C)legislation with concentrated benefits but widespread costs.
D)special-interest legislation benefitting a narrow geographical interest.
E)a quasi legislation.

Question 56

Special-interest legislation is _____

A)legislation involving widespread benefits and widespread costs.
B)legislation with widespread benefits but concentrated costs.
C)legislation with concentrated benefits but widespread costs.
D)special-interest legislation benefitting a narrow geographical interest.
E)a quasi legislation.

Question 57

Pork-barrel spending is _____

A)legislation involving widespread benefits and widespread costs.
B)legislation with widespread benefits but concentrated costs.
C)legislation with concentrated benefits but widespread costs.
D)special-interest legislation benefitting a narrow geographical interest.
E)a quasi legislation.

Question 58

Rationality implies that in order to get what they want,people will spend the most time and effort _____

A)making private market decisions.
B)electing the median voter.
C)investigating political candidates' platforms.
D)supplying more of the taxed resource so that their disposable income does not decline.
E)understating their true valuation of public goods and services.

Question 59

We can usually explain the outcome of majority rule by focusing on the preferences of _____

A)the median voter.
B)taxpayers.
C)political candidates.
D)private markets.
E)labor unions.

Question 60

Which of the following is an example of populist legislation?

A)legislation for the restoration of a historic theatre
B)the government setting a floor price on milk
C)legislation for tort reform
D)the government providing agricultural subsidies to farmers
E)legislation for funding cancer research

Question 61

The proposed takeover of Tony's Airlines by Plummet Airlines will result in increased profits for Plummet and increased airfares for consumers.This is an example of the _____

A)widespread distribution of benefits and costs.
B)concentrated distribution of costs and benefits.
C)concentrated distribution of benefits and widespread distribution of costs.
D)concentrated distribution of costs and widespread distribution of benefits.
E)benefit of a narrow geographical interest group.

Question 62

An example of competing-interest legislation is _____

A)a quota that limits the import of steel to the United States.
B)a subsidy to cigarette producers.
C)tax breaks for automobile manufacturers.
D)a new bridge in Arizona funded by general tax revenues.
E)public education subsidies.

Question 63

Legislation that involves concentrated benefits but widespread costs is called _____

A)traditional public-goods legislation.
B)special-interest legislation.
C)competing-interest legislation.
D)populist legislation.
E)primary legislation.

Question 64

In order to dispose of the nuclear waste created by power plants around the country,the government buys land in Glowing Gulch,Idaho.The residents of that town organize to block the construction of the nuclear waste facility.Which of the following statements is false?

A)The benefits of the nuclear waste facility are widespread.
B)The costs of the nuclear waste facility are concentrated.
C)The citizens of Glowing Gulch are a special-interest group.
D)The consumers of the power generated at the nuclear plants are not likely to organize to support the construction of the nuclear waste facility.
E)The citizens of Glowing Gulch are equally concerned about all public issues.

Question 65

Exhibit 16.2

Refer to Exhibit 16.2.Box 1 shows _____

A)traditional public-goods legislation.
B)populist legislation.
C)special interest legislation.
D)competing interest legislation.
E)quasi legislation.

Question 66

Competing-interest legislation involves _____

A)concentrated costs and widespread benefits.
B)both widespread costs and widespread benefits.
C)both concentrated costs and concentrated benefits.
D)widespread costs and concentrated benefits.
E)only concentrated costs; benefits are not involved.

Question 67

When the government increases taxes to provide traditional public goods,such as national security,there tend to be:

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

Question 68

Competing-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 69

Special-interest legislation that imposes costs over many taxpayers can be enacted because _____

A)this legislation involves widespread benefits.
B)taxpayers remain rationally ignorant of the legislation.
C)special-interest groups are driven by an incentive to produce output at the lowest cost per unit.
D)associated taxes are actually borne by a minority of taxpayers.
E)bureaus typically rely on taxes for part of their revenue.

Question 70

Exhibit 16.2

Refer to Exhibit 16.2.In Box 1,an example of traditional public-goods legislation is that for _____

A)national defense.
B)tort reform.
C)farm subsidies.
D)labor union issues.
E)rent-seeking.

Question 71

Legislation that provides a price support for dairy farmers is an example of _____

A)quasi legislation.
B)competing-interest legislation.
C)traditional public-goods legislation.
D)special-interest legislation.
E)populist legislation.

Question 72

A large U.S.steel firm wants to restrict imports of Japanese steel,but Ford Motor Company wants fewer restrictions on steel imports so that its cost of production remains constant.This can best be described as a(n)_____

A)zero-sum game.
B)example of a competing interest.
C)example of a special interest.
D)situation with widespread costs and concentrated benefits.
E)free-rider problem.

Question 73

Price support for corn involves _____

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

Question 74

JPC Motors benefits from tariffs on imported automobiles.Companies that use imported automobile parts want to get them cheaply.In this case,the issue of tariff legislation involves _____

A)a simple majority, because it promises concentrated costs and benefits.
B)competing interests, because it promises concentrated costs and benefits.
C)a simple majority, because it promises widespread benefits and costs.
D)competing interests, because it promises concentrated benefits and widespread costs.
E)competing interests, because it promises concentrated costs and widespread benefits.

Question 75

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 76

Competing-interest legislation _____

A)imposes benefits on only a few individuals but imposes costs on many people.
B)imposes both benefits and costs on relatively few individuals.
C)imposes benefits on many individuals but imposes costs on relatively few people.
D)imposes both benefits and costs on many individuals.
E)imposes costs on only those individuals who are rationally ignorant.

Question 77

Environmentalists,worried about sulfur dioxide in the air,pressure the government to make it mandatory for bus manufacturers to modify the exhaust systems in buses.In this situation,_____

A)the benefits of the proposed requirements are more widespread than costs.
B)the benefits and costs of the proposed requirements are equally widespread.
C)the benefits of the proposed requirements are concentrated but costs widespread.
D)the legislation involves both concentrated benefits and concentrated costs.
E)the advantage conferred by government on some special-interest groups requires higher incometaxes.

Question 78

Special-interest groups,such as the pharmaceutical lobby,often get what they demand because _____

A)politicians are rationally ignorant.
B)voters are rationally ignorant.
C)the pharmaceutical lobbying group intends to increase the quality of the service for the public.
D)they are driven by incentives to produce output at the lowest cost per unit.
E)bureaus typically rely on special-interest groups for their revenue.

Question 79

If general tax revenues were used to subsidize the production of toothpicks,the government's actions would have _____

A)widespread benefits and costs.
B)widespread costs and concentrated benefits.
C)concentrated benefits and costs.
D)widespread benefits and concentrated costs.
E)widespread costs and no benefits.

Question 80

Legislation that provides a subsidy to tobacco growers is an example of _____

A)quasi legislation.
B)competing-interest legislation.
C)traditional public-goods legislation.
D)special-interest legislation.
E)populist legislation.