Question 1

Public education is priced below market price largely as a result of

Accepted Answer

A)  government subsidy programs.
B)  under-funded public education.
C)  rising test scores by students.
D)  taxpayers who contribute little to the funding of public education.E) C) and D)
F) B) and D)

Question 2

How does the government carry out income redistribution?

Accepted Answer

Income redistribution can be carried out...

Question 3

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

Accepted Answer

A)  Flood control
B)  Post Office
C)  Health care
D)  WelfareE) A) and C)
F) None of the above

Question 4

-Refer to the above figure.In the absence of a subsidy,

Accepted Answer

A)  Qd would be demanded and  QM\mathrm { Q } _ { \mathrm { M } }QM​  would be supplied.
B)  the price Pd would be charged and quantity  QM\mathrm { Q } _ { \mathrm { M } }QM​  demanded.
C)  the quantity Qo and price Po would prevail in the market.
D)  None of the above is correct. E) B) and C)
F) A) and D)

Question 5

1 and Q1 to P2 and Q2. C) They change from P2 and Q2 to P1 and Q1. D) The equilibrium price increases from P1 and P2,but the equilibrium quantity is unchanged." class="answers-bank-image d-inline" rel="preload" >
-According to the above figure,if steel mills are charged an effluent fee in order to bear the cost of pollution,what happens to the equilibrium price and equilibrium quantity?

Accepted Answer

A)  They are unchanged.
B)  They change from P1 and Q1 to P2 and Q2.
C)  They change from P2 and Q2 to P1 and Q1.
D)  The equilibrium price increases from P1 and P2,but the equilibrium quantity is unchanged.E) A) and B)
F) B) and D)

Question 6

The difference between the economic and political functions of government is that

Accepted Answer

A)  the economic function is concerned with the Federal Taxation system while the political function is not.
B)  the economic function is concerned with correcting for market failures while the political function is not.
C)  the economic function is concerned with the reallocation of income while the political function is not.
D)  the economic function encourages merit goods while the political function discourages demerit goods.E) A) and C)
F) A) and D)

Question 7

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.E) A) and B)
F) B) and C)

Question 8

List and explain the four key assumptions in the theory of public choice.

Accepted Answer

The key assumptions in the theory of pub...

Question 9

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.E) None of the above
F) B) and D)

Question 10

1 to S2 reflects the change that happens when a negative externality is taken into account.A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account. -Refer to above figures.Prior to the shift of the curves,which panel and which curve involve the existence of negative externality? A) Panel 1 and S1 B) Panel 1 and S2 C) Panel 2 and D1 D) Panel 2 and D2" class="answers-bank-image d-inline" rel="preload" > A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account.A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to above figures.Prior to the shift of the curves,which panel and which curve involve the existence of negative externality?

Accepted Answer

A)  Panel 1 and S1
B)  Panel 1 and S2
C)  Panel 2 and D1
D)  Panel 2 and D2E) B) and D)
F) A) and C)

Question 11

Many nations are consistently accused of enjoying the benefits of membership in the United Nations,yet they provide few or no funds to support the organization.This is an example of

Accepted Answer

A)  the principle of rival consumption.
B)  the free-rider problem.
C)  the negative externality problem.
D)  the property rights problem.E) A) and D)
F) All of the above

Question 12

Which of the following statements is true of external costs?

Accepted Answer

A)  External costs should not be corrected since people will bear the costs whether they are corrected or not.
B)  There are no good ways to correct for the external costs.
C)  When external costs exist,the price of the good will be deceptively low leading to an overallocation of resources.
D)  External costs should only be corrected for if the correction will not increase the market price.E) B) and D)
F) B) and C)

Question 13

According to the textbook,what are the two key political functions of government in a market economy?

Accepted Answer

The two functions of governmen...

Question 14

Which of the following goods is NOT subject to the free-rider problem?

Accepted Answer

A)  National defense
B)  The local police force
C)  Public fireworks
D)  A public transit systemE) All of the above
F) A) and B)

Question 15

Explain why economists consider it to be one of the economic functions of government to provide a legal system.

Accepted Answer

A market economy relies heavily on contr...

Question 16

In public education,the value of the services provided is

Accepted Answer

A)  greater than the value that parents and students place on the services.
B)  equal to the value that parents and students place on the services.
C)  less than the value that parents and students place on the services.
D)  zero since they are a public good.E) A) and B)
F) A) and C)

Question 17

A government-inhibited good is one that

Accepted Answer

A)  cannot be individually consumed.
B)  would be underproduced by the private market.
C)  should be subsidized to correct the market failure and productive inefficiency.
D)  has been deemed socially undesirable via the political process.E) A) and B)
F) A) and C)

Question 18

Suppose a valley periodically floods.A dam can be built in the river that would prevent the flooding.Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

Accepted Answer

The dam would be indivisible since it mu...

Question 19

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.E) B) and C)
F) None of the above

Question 20

What is an externality? How do positive and negative externalities differ in their effects? How can government action correct positive and negative externalities?

Accepted Answer

An externality is a cost or benefit of a...

Exam 4: Public Spending and Public Choice

-According to the above figure,if steel mills are charged an effluent fee in order to bear the cost of pollution,what happens to the equilibrium price and equilibrium quantity?

Correct Answer
verified

Explain why economists consider it to be one of the economic functions of government to provide a legal system.

Correct Answer
verified
A market economy relies heavily on contr...
View Answer

List and explain the four key assumptions in the theory of public choice.

Correct Answer
verified
The key assumptions in the theory of pub...
View Answer

What is an externality? How do positive and negative externalities differ in their effects? How can government action correct positive and negative externalities?

Correct Answer
verified
An externality is a cost or benefit of a...
View Answer

Which of the following goods is NOT subject to the free-rider problem?

Correct Answer
verified

In public education,the value of the services provided is

Correct Answer
verified

Many nations are consistently accused of enjoying the benefits of membership in the United Nations,yet they provide few or no funds to support the organization.This is an example of

Correct Answer
verified

Correct Answer
verified

Which of the following statements is true of external costs?

Correct Answer
verified

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

Correct Answer
verified

The difference between the economic and political functions of government is that

Correct Answer
verified

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

Correct Answer
verified

A government-inhibited good is one that

Correct Answer
verified

Suppose a valley periodically floods.A dam can be built in the river that would prevent the flooding.Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

Correct Answer
verified
The dam would be indivisible since it mu...
View Answer

In the absence of government,

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Public education is priced below market price largely as a result of

Correct Answer
verified

How does the government carry out income redistribution?

Correct Answer
verified
Income redistribution can be carried out...
View Answer

According to the textbook,what are the two key political functions of government in a market economy?

Correct Answer
verified
The two functions of governmen...
View Answer

Exam 4: Public Spending and Public Choice

-According to the above figure,if steel mills are charged an effluent fee in order to bear the cost of pollution,what happens to the equilibrium price and equilibrium quantity?

Correct AnswerverifiedShow Answer

Explain why economists consider it to be one of the economic functions of government to provide a legal system.

Correct AnswerverifiedA market economy relies heavily on contr...View AnswerShow Answer

List and explain the four key assumptions in the theory of public choice.

Correct AnswerverifiedThe key assumptions in the theory of pub...View AnswerShow Answer

What is an externality? How do positive and negative externalities differ in their effects? How can government action correct positive and negative externalities?

Correct AnswerverifiedAn externality is a cost or benefit of a...View AnswerShow Answer

Which of the following goods is NOT subject to the free-rider problem?

Correct AnswerverifiedShow Answer

In public education,the value of the services provided is

Correct AnswerverifiedShow Answer

Many nations are consistently accused of enjoying the benefits of membership in the United Nations,yet they provide few or no funds to support the organization.This is an example of

Correct AnswerverifiedShow Answer

-Refer to the above figure.In the absence of a subsidy,

Correct AnswerverifiedShow Answer

Which of the following statements is true of external costs?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The difference between the economic and political functions of government is that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A government-inhibited good is one that

Correct AnswerverifiedShow Answer

Suppose a valley periodically floods.A dam can be built in the river that would prevent the flooding.Explain how flood control provided by building the dam arguably fits the characteristics of a public good.

Correct AnswerverifiedThe dam would be indivisible since it mu...View AnswerShow Answer

In the absence of government,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Public education is priced below market price largely as a result of

Correct AnswerverifiedShow Answer

How does the government carry out income redistribution?

Correct AnswerverifiedIncome redistribution can be carried out...View AnswerShow Answer

According to the textbook,what are the two key political functions of government in a market economy?

Correct AnswerverifiedThe two functions of governmen...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
A market economy relies heavily on contr...
View Answer

Correct Answer
verified
The key assumptions in the theory of pub...
View Answer

Correct Answer
verified
An externality is a cost or benefit of a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The dam would be indivisible since it mu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Income redistribution can be carried out...
View Answer

Correct Answer
verified
The two functions of governmen...
View Answer