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

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Question 41

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Which of the following would be the best example of regulatory capture?

A) Starbucks buys up all the available supplies of coffee beans.
B) Nike executives influence the rules for track and field events.
C) Federal law makers write and pass legislation that protects domestic companies from foreign competition.
D) Executives from the Ford, General Motors, and Chrysler companies write the rules regulating automobile safety and fuel requirements.

E) All of the above
F) A) and B)

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Question 42

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The appeal to government for special benefits at taxpayers' or someone else's expense is called the paradox of voting.

A) True
B) False

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Question 43

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Because majority voting fails to incorporate the strength of the preferences of individual voters, it

The principle that under some circumstances majority voting fails to make consistent choices reflecting the community's underlying preference is best demonstrated by the

In corporations, owners are __________________ and managers are ________________.

Suppose that Mick and Cher are the only two members of society and are willing to pay $10 and $8, respectively, for the third unit of a public good. Also, assume that the marginal cost of the third unit is $17. We Can conclude that

In presidential elections, voters often find that they do not agree with any single candidate on all the issues that matter to them (the voters) . This is known as the

Critics of government contend that the market system creates incentives and pressures for internal efficiency that are absent in the public sector.

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

Which of the following is the best example of rent-seeking behavior?

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. $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Total Costs per } \\\text { Year }\end{array} & \begin{array} { c } \text { Total Benefits per Year (reduction in } \\\text { the costs of crime) }\end{array} \\\hline \text { Level One -1 Security Officer } & \$ 20,000 & \$ 80,000 \\\hline \text { Level Two -1 Security Officer with Guard Dog } & 30,000 & 120,000 \\\hline \text { Level Three -1 Security Officer with Guard Dog and Patrol Car } & 40,000 & 140,000 \\\hline \text { Level Four -2 Security Officers with Guard Dog } & 50,000 & 155,000 \\\hline \text { Level Five -2 Security Officers with Guard Dog and Patrol Car } & 60,000 & 160,000 \\\hline\end{array}$ If New Normal University undertakes program Level Three,

Refer to the table. The inconsistency illustrated by the table is that, while a majority of voters prefer the

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

Regulatory capture occurs when government exerts excessive control over an industry.

Some economists contend that government agencies are generally less efficient than private businesses due to the following reasons, except

The following data are for a series of increasingly extensive ?ood-control projects. $\begin{array} { | l | c | c | } \hline & \text { Total Cost per Year } & \text { Total Benefit per Year } \\\hline \text { Plan } A = \text { Levees } & \$ 10,000 & \$ 16,000 \\\hline \text { Plan } B = \text { Small Reservoir } & 24,000 & 36,000 \\\hline \text { Plan C = Medium Reservoir } & 44,000 & 52,000 \\\hline \text { Plan } D = \text { Large Reservoir } & 72,000 & 64,000 \\\hline\end{array}$ For Plan D marginal costs and marginal bene?ts are

Rivalry means that when one person buys and consumes a product, it is not available for purchase and consumption by another person.

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. $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Total Costs per } \\\text { Year }\end{array} & \begin{array} { c } \text { Total Benefits per Year (reduction in } \\\text { the costs of crime) }\end{array} \\\hline \text { Level One-1 Security Officer } & \$ 20,000 & \$ 80,000 \\\hline \text { Level Two -1 Security Officer with Guard Dog } & 30,000 & 120,000 \\\hline \text { Level Three -1 Security Officer with Guard Dog and Patrol Car } & 40,000 & 140,000 \\\hline \text { Level Four -2 Security Officers with Guard Dog } & 50,000 & 155,000 \\\hline \text { Level Five -2 Security Officers with Guard Dog and Patrol Car } & 60,000 & 160,000 \\\hline\end{array}$ Based on cost-bene?t analysis, New Normal University should undertake Level

Which of the following would best explain why regulatory capture is a problem?

According to the marginal-cost-marginal-benefit rule,