Question
Use the figure below to answer the following question(s).
Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which type would the government most likely fail to undertake many projects that would be considered efficient or productive (in other words, do too few of them relative to economic efficiency)?
A) as more of a good or service is consumed, demand will decrease.
B) as more of a good or service is consumed, the price will rise.
C) the marginal utility of additional units consumed will increase.
D) the marginal utility of additional units consumed will decline.
Compared to ideal economic efficiency, when the production of a good generates external benefits, competitive markets will likely result in an output that is too large and a price that is too high. large and a price that is too low. small and a price that is too high. small and a price that is too low. A car sells at different prices at different dealerships in a local market. If a consumer has imperfect information about the price of a car at each dealership, he should always gather all available information about prices. gather information about prices until the expected marginal benefit of more information equals the marginal cost of gathering it. gather information about prices only if it can be gathered without cost. ignore information about prices because it is irrelevant to making an "optimally imperfect" decision. The problem created when it is difficult to exclude nonpaying customers is called the consumption-payment link problem. free-rider problem. public sector dilemma. asymmetric information problem. Which of the following provides the best summary of the basic idea of public choice analysis? Public choice analysis applies the principles of economics to political science topics. Public choice analysis takes the principles of political science and applies them to the traditional topics of economics. Public choice analysis uses the principle of majority rule to determine the efficiency of an action. Public choice analysis indicates there is a sharp distinction between economic and political topics. In a representative democracy, government action results from the choices of voters. legislative decisions by politicians. political action of organized interest groups. complex interaction of all of the above. Which of the following increases the political power of special interest groups and makes counterproductive government action more likely? logrolling and pork barrel legislation the rational-ignorance effect public goods both a and b, but not c Use the figure below to answer the following question(s) Figure 6-1 illustrates the four possibilities of the distribution of costs and benefits among voters for a government project. For which type would the government most likely fail to undertake many projects that would be considered efficient or productive (in other words, do too few of them relative to economic efficiency)? type A type B type C type D Despite many differences, the market and public sectors are similar in which one of the following respects? In both sectors, income (or power) is distributed on the basis of the same criterion. Consumers in the market sector and voters in the public sector are equally well informed. Voluntary exchange, rather than compulsion, is characteristic of both sectors. It will be costly to use scarce goods, whether through the private or the public sector. Studies indicate that the demand for fresh tomatoes is much more elastic than the demand for salt. These findings reflect that tomatoes are a necessity while salt is a luxury. it takes longer for consumers to adjust to a change in the price of salt than to a change in the price of tomatoes. salt will not spoil as easily as fresh tomatoes. more good substitutes exist for fresh tomatoes than for salt. The principle of diminishing marginal utility says that as more of a good or service is consumed, demand will decrease. as more of a good or service is consumed, the price will rise. the marginal utility of additional units consumed will increase. the marginal utility of additional units consumed will decline.
Explanation / Answer
27 d
28 a
29 b
30 a
31 b
32 d
33 c
34 a
35 c
36 d
