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Exam 5: Public Goods, Public Choice, and Government Failure

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Question 51

Multiple Choice

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Suppose that in a series of paired-choice votes, a new park is preferred to a new recreation center and a new recreation center is preferred to street widening. Also suppose that street widening is preferred to a new park. This set of votes is an example of the

A) principal-agent problem.
B) benefits-received principle.
C) median-voter model.
D) paradox of voting.

E) None of the above
F) A) and B)

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Question 52

Multiple Choice

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Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $100, what is the Minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third Unit?

A) $35
B) $100
C) $65
D) The amount cannot be determined with the information provided.

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

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Question 53

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The optimal quantity of a public good is where the total benefits from it are equal to the total costs of producing it.

Describe the two characteristics of private goods.

(Consider This) A study of hospitals, power plants, and water utilities found that

The problem of limited and bundled choices explains why many voters cannot fully express their political preferences.

Nobody gains from pork-barrel politics other than the politicians.

When the special-interest effect is the major reason for the passage of a government policy or project, then economic efficiency will always improve.

Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of

New Normal University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism. The university is now considering several alternative levels of crime Control. This table shows the expected total annual costs and bene?ts of these alternatives. $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Total Costs per } \\\text { Year }\end{array} & \begin{array} { c } \text { Total Benefits per Year (reduction in } \\\text { the costs of crime) }\end{array} \\\hline \text { Level One -1 Security Officer } & \$ 20,000 & \$ 80,000 \\\hline \text { Level Two -1 Security Officer with Guard Dog } & 30,000 & 120,000 \\\hline \text { Level Three -1 Security Officer with Guard Dog and Patrol Car } & 40,000 & 140,000 \\\hline \text { Level Four -2 Security Officers with Guard Dog } & 50,000 & 155,000 \\\hline \text { Level Five -2 Security Officers with Guard Dog and Patrol Car } & 60,000 & 160,000 \\\hline\end{array}$ The marginal bene?t of crime control for Level Two is

(Consider This) Why are mohair subsidies still being paid although their initial purpose has long expired?

In assessing the efficiency of government policy, economic analysis would focus on

Which statement best describes the special-interest effect?

Public choice theorists contend that

Does majority voting lead to efficient outcomes?

Deregulation is seen as a solution to regulatory capture because it eliminates the regulatory agency that can or has been captured.

In representative democracy, voters are ____________ and politicians are ______________.

A situation in which society may not be able to rank its preferences consistently through paired-choice majority voting is

(Last Word) Location subsidies include all the following except

Refer to the table. In a choice between education and public safety,