Deck 7: Public Choice

Question 1

A person prefers large and small levels of national defence to medium-sized levels of national defence. This person

A)has single-peaked preferences.
B)has multiple-peaked preferences.
C)is not rational.
D)cannot achieve his or her most-preferred outcome.

Answer 1

has multiple-peaked preferences.

Question 2

Logrolling is

A)a system that generally involves double-peaked preferences.
B)a system used often at lumberjack contests.
C)a system that involves the trading of votes.
D)a system that will always lead to worthy projects getting funded.

Answer 2

a system that involves the trading of votes.

Question 3

Controlling the growth of government can be difficult because

A)of strict budgetary rules.
B)of commitments made by past governments.
C)governments do not like increasing taxes.
D)all of these answers are correct.

Answer 3

of commitments made by past governments.

Question 4

Rent seeking involves

A)citizen groups lobbying elected officials to manipulate government policy.
B)finding reasonable rent rates.
C)price ceilings.
D)price floors.

Question 5

Criticism for bureaucrats wanting larger budgets include:

A)causing more inefficiency.
B)"empire building".
C)causing salary escalation.
D)all of these answers are correct.

Question 6

The possibility of multiple-peaked preferences cannot be ruled out.

A)True
B)False
C)Uncertain

Question 7

Special interest groups are established on the basis of

A)size of income.
B)sources of income.
C)region.
D)all of these answer options are correct.

Question 8

Special interest groups are a detriment to the political process.

A)True
B)False
C)Uncertain

Question 9

A deadweight loss is never

A)found in democratic economies.
B)found in Canada.
C)found in the real world.
D)found when marginal benefits equal marginal costs.

Question 10

Democratically elected governments easily respond to the public interest.

A)True
B)False
C)Uncertain

Question 11

Applying economic principles to the analysis of political decision making is public choice.

A)True
B)False
C)Uncertain

Question 12

The Marxist view would say that there is an overproduction of goods by the private sector.

A)True
B)False
C)Uncertain

Question 13

In a representative democracy, there are

A)special interests.
B)public employees.
C)elected politicians.
D)all of these answers are correct.

Question 14

Lindahl prices

A)result in efficient levels of public goods provision.
B)result in different prices for the same amount of output.
C)require honest revelation of preferences.
D)cause all of these.

Question 15

When each individual has consistent preferences, but those of the community are not consistent, it is known as

A)logrolling.
B)majority rule.
C)a voting paradox.
D)agenda manipulation.

Question 16

With multiple-peaked preferences,

A)a unique political equilibrium does not exist.
B)a voting paradox emerges.
C)all individuals have a point that is most preferred.
D)all of these answers are correct.

Question 17

Governments grow because low income individuals cannot use the political process to redistribute income towards themselves.

A)True
B)False
C)Uncertain

Question 18

Government growth has been caused by

A)lots of public lands available in the West.
B)inflation.
C)increases in privatization.
D)citizens who want larger government.

Question 19

In 2015 which country had the highest ratio of government expenditures to GDP?

A)Germany
B)United States
C)Canada
D)France

Question 20

Which of the following is an example of a special-interest group?

A)Canadian Association of Petroleum Producers
B)Liberal party
C)Department of Transportation
D)all of these answers are correct.

Question 21

Consider the following net benefits (measured in billions of dollars)that will result from the passage of two legislative bills, X and Y:
(a)Identify the logrolling opportunity present in this situation.
(b)Identify the potential gains to voters.
(c)Explain why logrolling is or is not efficiency enhancing.

Question 22

The median voter must have preferences that reflect those of all people in the community.

A)True
B)False
C)Uncertain

Question 23

Majority rule voting

A)can only be applied to single issues.
B)requires that rules of order be established.
C)requires a simple majority greater than half the voters.
D)does not occur in democracies.

Question 24

Under certain assumptions, the actions of elected officials mimic the wishes of the median voter.

A)True
B)False
C)Uncertain

Question 25

Consider the figure below. If the equation for the demand curve were P = 10 - Q and MC constant at 4,
(a)Find the competitive level of output and price.
(b)Find the marginal revenue and derive the rent seeking cartel's output and price.
(c)How much rent is being raised?

Question 26

Arrow's impossibility theorem does not cast doubt on the ability of democracies to function.

A)True
B)False
C)Uncertain

Question 27

Elected politicians care more about winning elections than the ideology of the voters they represent.

A)True
B)False
C)Uncertain

Question 28

Suppose that you have two people in an economy, Ms. Hundley and Mr. McKenna, who want to produce a public good S. Suppose we calculate the Lindahl equilibrium using the method in your textbook. In this case, the demand curve for Ms. Hundley is S = P1/2. The demand curve for Mr. McKenna is S = 8/P. If the marginal social cost of the project is 10, what is the Lindahl equilibrium quantity of S? What are the Lindahl prices?

Question 29

In the Canadian federal election of 2015, voter turnout was the highest since 1993. What are possible explanations for this?

Question 30

What should be the priority of politicians? Should they be mainly concerned with conveying and
voting the wishes of the people that they represent? Should they be mainly concerned with standing for positions that they feel strongly about? Should they be mainly concerned with securing reelection?

Question 31

Suppose there were three candidates running for office: Dewey, Cheatum, and Howe. Suppose a majority of voters preferred Cheatum to Dewey. Does this mean that a majority of voters preferred Howe to Dewey?

Question 32

It is stated that, in democracy, every vote counts. To be a conscientious voter in a democracy, one should

A)be sure to vote.
B)find out about the positions of the candidates.
C)spend some time learning about the issues.
D)all of these answers are correct.

Question 33

Special interest groups are not always perceived to add positively to society. Discuss why this may be so.