Question 1

A progressive tax system is one in which tax rates rise as incomes rise.
A progressive tax system is one in which tax rates rise as incomes rise.

Accepted Answer

A) True 
 B)False

Question 2

Government intervention to alter market structure or prevent abuse of market power is the basic purpose of

Accepted Answer

A)  Merit goods.
B)  Government taxes.
C)  Social demand.
D)  Antitrust policy.E) A) and D)
F) All of the above

Question 3

In real terms,the cost of government spending is measured by

Accepted Answer

A)  Combining the private sector output with the public sector output sacrificed when the government employs scarce resources.
B)  Subtracting private sector output from the public sector output sacrificed when the government employs scarce resources.
C)  Only the private sector output sacrificed when the government employs scarce resources.
D)  Only the public sector output sacrificed when the government employs scarce resources.E) C) and D)
F) A) and B)

Question 4

The free-rider dilemma occurs in the provision of public goods because an individual can realize the benefits of someone else's purchase (consumption)of a public good.
A free rider is an individual who reaps direct benefits from someone else's purchase (consumption)of a public good.

Accepted Answer

A) True 
 B)False

Question 5

Fire protection and police protection can be produced more efficiently by the private sector than by the public sector.
Fire and police protection are public goods; therefore,the private sector will underproduce these services.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is possible when the market fails?

Accepted Answer

A)  The mix of goods and services is on the production possibilities curve.
B)  It is impossible for government intervention to improve the mix of goods and services.
C)  The mix of goods and services is at the correct point on the production possibilities curve.
D)  The mix of goods and services is the optimal mix.E) A) and B)
F) C) and D)

Question 7

If your neighbors remove the weeds in their yard and this activity prevents weed seeds from blowing into your yard,the benefit you receive is a public good.
If your neighbors remove the weeds in their yard and this activity prevents weed seeds from blowing into your yard,the benefit you receive is an externality.

Accepted Answer

A) True 
 B)False

Question 8

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" claims what percentage of all deaths worldwide are caused by secondhand smoke?

Accepted Answer

A)  1 percent.
B)  2 percent.
C)  5 percent.
D)  None of the choices are correct.E) C) and D)
F) A) and C)

Question 9

Which of the following justifies the federal government's role in antitrust enforcement?

Accepted Answer

A)  Inequity.
B)  Public goods and externalities.
C)  Market power.
D)  Macro failure.E) All of the above
F) None of the above

Question 10

Government intervention that fails to improve economic outcomes is known as market failure.
Government intervention that fails to improve economic outcomes is known as government failure.

Accepted Answer

A) True 
 B)False

Question 11

As long as a public sector activity will generate benefits regardless of the costs,the activity should definitely be undertaken.
Public sector activity should generate benefits that are greater than or equal to the costs of producing them.

Accepted Answer

A) True 
 B)False

Question 12

Social demand is equal to

Accepted Answer

A)  Market demand plus or minus externalities.
B)  Public demand plus or minus externalities.
C)  Tax revenue plus or minus externalities.
D)  Private goods plus or minus externalities.E) A) and B)
F) A) and C)

Question 13

The federal government's role as the provider of national defense is justified by considerations of

Accepted Answer

A)  Inequity.
B)  Public goods.
C)  Private goods.
D)  None of the choices are correct.E) C) and D)
F) A) and C)

Question 14

An In the News article titled "Persistent Doubts about Government Waste" implies that people think the public sector is not producing as many services as it could with the resources at its disposal.If this is true,this indicates a situation of

Accepted Answer

A)  Market failure.
B)  Government failure.
C)  Efficiency.
D)  Merit goods.E) C) and D)
F) None of the above

Question 15

Suppose that if your income is $20,000,your tax is $4,000,but if your income is $40,000,your tax is $8,000.Such a tax is

Accepted Answer

A)  Regressive.
B)  Progressive.
C)  Proportional.
D)  A merit tax.E) None of the above
F) A) and B)

Question 16

Which of the following statements is inaccurate?

Accepted Answer

A)  There is substantial agreement about how and when markets fail.
B)  There is substantial agreement about whether government improves market outcomes.
C)  Voters are quick to blame government meddling for many economic woes.
D)  Ideally,the market mechanism will lead an economy to the optimal mix of output.E) B) and C)
F) C) and D)

Question 17

The market tends to underproduce public goods because

Accepted Answer

A)  The consumption of a public good by one person prevents the consumption of the same good by another person.
B)  The free-rider dilemma results in exclusive consumption of a good.
C)  It is difficult to measure the benefit of a public good such as national defense.
D)  Joint consumption allows those who do not pay for the good to still benefit from the gooD.Because the familiar link between paying and consuming is broken,public goods cannot be peddled in the supermarket.People are reluctant to buy what they can get for free.E) All of the above
F) B) and C)

Question 18

Monopolies will tend to overproduce goods and charge a higher price than the competitive price.
Monopolies will tend to underproduce goods and charge a higher price than the competitive price.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following scenarios would support the theory of public choice?

Accepted Answer

A)  The governor of the state vetoes a highway bill even though the highway would enhance the value of property he or she owns.
B)  The local police chief fails to give the mayor a speeding ticket because the mayor might fire him.
C)  The president of Colombia goes after drug traffickers despite death threats and the offer of bribes that could make him a rich man.
D)  A college president eliminates wasteful departments and programs even though this will shorten her tenure and her political future.E) A) and B)
F) A) and C)

Question 20

The market

Accepted Answer

A)  On its own may not always provide the optimal mix of goods and services.
B)  Always provides the optimal mix of goods and services.
C)  Always provides a better mix of goods and services without government intervention than it does with government intervention.
D)  May not produce the optimal mix of output,which is known as government failure.E) B) and D)
F) B) and C)

Exam 4: The Role of Government

Which of the following scenarios would support the theory of public choice?

Correct Answer
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Which of the following justifies the federal government's role in antitrust enforcement?

Correct Answer
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A progressive tax system is one in which tax rates rise as incomes rise. A progressive tax system is one in which tax rates rise as incomes rise.

Correct Answer
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Social demand is equal to

Correct Answer
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An In the News article titled "Persistent Doubts about Government Waste" implies that people think the public sector is not producing as many services as it could with the resources at its disposal.If this is true,this indicates a situation of

Correct Answer
verified

Which of the following statements is inaccurate?

Correct Answer
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Correct Answer
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In real terms,the cost of government spending is measured by

Correct Answer
verified

Government intervention that fails to improve economic outcomes is known as market failure. Government intervention that fails to improve economic outcomes is known as government failure.

Correct Answer
verified

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" claims what percentage of all deaths worldwide are caused by secondhand smoke?

Correct Answer
verified

Which of the following is possible when the market fails?

Correct Answer
verified

Fire protection and police protection can be produced more efficiently by the private sector than by the public sector. Fire and police protection are public goods; therefore,the private sector will underproduce these services.

Correct Answer
verified

The market tends to underproduce public goods because

Correct Answer
verified

The free-rider dilemma occurs in the provision of public goods because an individual can realize the benefits of someone else's purchase (consumption)of a public good. A free rider is an individual who reaps direct benefits from someone else's purchase (consumption)of a public good.

Correct Answer
verified

Suppose that if your income is $20,000,your tax is $4,000,but if your income is $40,000,your tax is $8,000.Such a tax is

Correct Answer
verified

The federal government's role as the provider of national defense is justified by considerations of

Correct Answer
verified

The market

Correct Answer
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Government intervention to alter market structure or prevent abuse of market power is the basic purpose of

Correct Answer
verified

Monopolies will tend to overproduce goods and charge a higher price than the competitive price. Monopolies will tend to underproduce goods and charge a higher price than the competitive price.

Correct Answer
verified

As long as a public sector activity will generate benefits regardless of the costs,the activity should definitely be undertaken. Public sector activity should generate benefits that are greater than or equal to the costs of producing them.

Correct Answer
verified

Exam 4: The Role of Government

Which of the following scenarios would support the theory of public choice?

Correct AnswerverifiedShow Answer

Which of the following justifies the federal government's role in antitrust enforcement?

Correct AnswerverifiedShow Answer

A progressive tax system is one in which tax rates rise as incomes rise. A progressive tax system is one in which tax rates rise as incomes rise.

Correct AnswerverifiedShow Answer

Social demand is equal to

Correct AnswerverifiedShow Answer

An In the News article titled "Persistent Doubts about Government Waste" implies that people think the public sector is not producing as many services as it could with the resources at its disposal.If this is true,this indicates a situation of

Correct AnswerverifiedShow Answer

Which of the following statements is inaccurate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In real terms,the cost of government spending is measured by

Correct AnswerverifiedShow Answer

Government intervention that fails to improve economic outcomes is known as market failure. Government intervention that fails to improve economic outcomes is known as government failure.

Correct AnswerverifiedShow Answer

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" claims what percentage of all deaths worldwide are caused by secondhand smoke?

Correct AnswerverifiedShow Answer

Which of the following is possible when the market fails?

Correct AnswerverifiedShow Answer

Fire protection and police protection can be produced more efficiently by the private sector than by the public sector. Fire and police protection are public goods; therefore,the private sector will underproduce these services.

Correct AnswerverifiedShow Answer

The market tends to underproduce public goods because

Correct AnswerverifiedShow Answer

The free-rider dilemma occurs in the provision of public goods because an individual can realize the benefits of someone else's purchase (consumption)of a public good. A free rider is an individual who reaps direct benefits from someone else's purchase (consumption)of a public good.

Correct AnswerverifiedShow Answer

Suppose that if your income is $20,000,your tax is $4,000,but if your income is $40,000,your tax is $8,000.Such a tax is

Correct AnswerverifiedShow Answer

The federal government's role as the provider of national defense is justified by considerations of

Correct AnswerverifiedShow Answer

The market

Correct AnswerverifiedShow Answer

Government intervention to alter market structure or prevent abuse of market power is the basic purpose of

Correct AnswerverifiedShow Answer

Monopolies will tend to overproduce goods and charge a higher price than the competitive price. Monopolies will tend to underproduce goods and charge a higher price than the competitive price.

Correct AnswerverifiedShow Answer

As long as a public sector activity will generate benefits regardless of the costs,the activity should definitely be undertaken. Public sector activity should generate benefits that are greater than or equal to the costs of producing them.

Correct AnswerverifiedShow Answer

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