Deck 17: Explaining Tastes: The Importance of Altruism and

Question 1

Which of the following goods is nondiminishable?

A)Clean air
B)A free concert
C)The use of a lighthouse
D)National parks

Answer 1

C

Question 2

Which is not a good method of providing public type goods by private means?

A)Funding by donation
B)Private contracts
C)Clubs
D)Free markets with competing entrepreneurs

Answer 2

D

Question 3

A public good is described, in part, as a good

A)That is essential to life
B)That may be depleted if demand is heavy
C)That has a marginal cost at or near zero
D)Which has all of the above characteristics

Answer 3

C

Question 4

A negative income tax works by

A)Taxing people until they have a negative income
B)Giving people below a certain income level a lump sum and then taxing further income
C)Giving money to everyone in the U.S
D)Not taxing people who make negative income

Question 5

Charles Tiebout favors

A)Government provision of all public goods
B)User taxes on public goods
C)People moving to local communities with others of similar tastes
D)People of different tastes living in the same place

Question 6

If the total costs of providing the public good are $20, then

A)both Jill and John would be willing to vote to approve of providing the good.
B)only Jill would be willing to vote to approve of providing the good.
C)only John would be willing to vote to approve of providing the good.
D)neither Jill nor John would be willing to vote to approve of providing the good.

Question 7

In the example above, what is John's incentive per week to work a normal 40 hour week and get off of welfare?

A)$160
B)$120
C)$40
D)$0

Question 8

The optimal output of a public good occurs where

A)The total cost of the good equals the cumulated benefits of all consumers
B)The sum of the marginal benefit of each consumer at a given output equals the marginal cost of the good
C)The marginal benefit of the consumer who values the good most should equal the marginal cost of the good
D)The horizontal sum of the consumer benefits of the good should equal the marginal cost of producing the good

Question 9

Which of the following is the best example of a nonexcludable good?

A)Television broadcast over the air
B)Cable TV
C)National parks
D)Beer

Question 10

A new fad dramatically increases the demand for donut-holes, the leftovers produced from donut production.According to economic theory one would expect

A)The price of donuts to rise
B)The price of donuts to fall
C)The price of donuts to stay the same
D)That one cannot tell

Question 11

If voters are rational, they are more likely to vote

A)In large national elections
B)If the issues are complex
C)In small local elections
D)When they are employed

Question 12

John Doe participates in a welfare scheme which pays him $6,000 dollars.He can work for $4.00 an hour.If there are 50 working weeks in a year, how many hours a week would he have to work to make as much as he would on welfare?

A)20
B)30
C)40
D)15

Question 13

Suppose Congress consists of 5 people who want to spend X% on national defense.Let their preferences be as follows: 1, 3, 20, 21, 25.What amount will most likely be spent?

A)14
B)20
C)3
D)21

Question 14

According to Rawls, individuals placed behind a veil of ignorance would

A)Choose a more egalitarian society
B)Choose a less egalitarian society
C)Move from a democracy to an authoritarian form of government
D)Move from an authoritarian to a democratic form of government

Question 15

Congress has not been able to vote with clarity on a war in country X.It seems like there are three options that they consider.(1) They could negotiate the best agreement they can get and leave the area.(2) They could continue the air campaign.(3) They could continue the air campaign and send ground troops into the area.In terms of expense the options get increasingly expensive.If a representative from Illinois has a preference order of (1), (3), (2), we can say that:

A)The median voter rule will not apply
B)The representative has a single peaked voting preference
C)The representative has a double peaked voting preference
D)It can not be answered with the information given

Question 16

Attempts to lobby the government for private gain are referred to by the text as

A)Corruption
B)Graft
C)Rent-seeking
D)Collective agreements

Question 17

Say 6 homogenous consumers have individual willingness to pay P = 20 - 4Q. If the marginal cost of providing Q is 6Q, the optimal amount of Q is:

A)2
B)4
C)6
D)0

Question 18

According to the text, one of the disadvantages of our current welfare system is that

A)It provides incentives for the poor not to work
B)It gives the poor too much money
C)It works in the opposite direction of Rawl's view of justice
D)It is biased in favor of rich people

Question 19

When the optimal quantity of this good is provided the Jill's willingness to pay for the good is:

A)4
B)12
C)48
D)2

Question 20

The best example of a public good is

A)Education
B)National defense
C)Welfare
D)Automobiles

Question 21

At least in theory.the marginal productivity system generates a solution where people who are 50% more productive than others working in their same field are paid

A)equally, regardless of the field they work.
B)differently, according to how dangerous is their work.
C)equally, as long as they do not take advantage of the system.
D)differently, and according to how popular is the good provided to consumers in their field.

Question 22

Handicap access to buildings is becoming very expensive for many operators of public buildings.Are the laws mandating such alterations based on social efficiency or some other criteria?

Question 23

What is the socially optimal output level?

Question 24

Draw a graph of the individual demand equations and the total community demand for fireworks.Sketch in the marginal cost function as well.

Question 25

From your answers above make an application to the worlds income distribution using John Rawl's terms "veil of ignorance", "economic justice", and "poorest of the poor".

Question 26

If you were able to increase the overall class grade point average above the 2.0 to a level of 2.5, what would you do to the distribution.

Question 27

The grade distribution in this class will fit a bell curve as shown below.
F.In other words, they are risk averse.Some students will promote all C's in the distribution.

Question 28

According to the negative income tax, the breakeven income level for a program whose tax credit is $3,000 and whose tax rate is 30 percent would be:

A)$10,000
B)$6,000
C)$4,500
D)$9,000

Question 29

What is the total community demand equation for the fireworks display?

Question 30

The following is an example of a pure public good:

A)Yellowstone National Park
B)Clean Air
C)National Defense
D)Public Education

Question 31

The market demand curve for a public good is found by

A)Horizontally summing the individual demand curves
B)Vertically summing the individual demand curves
C)Horizontally summing the firm's demand curves
D)Vertically summing the firm's demand curves

Question 32

According to the text one of the ways to solve the public good problem is:

A)To allow private firms in free markets to provide the good for a fee
B)For the government to provide the good for free by using a compulsory tax
C)Not to provide the good at all
D)Finding ways of forcing people to pay for the good

Question 33

The marginal benefit reduction rate is the fraction

A)by which government benefits are reduced from some beneficiaries
B)of income that is given to every person under the negative income tax credit program.
C)by which government reduces the income of every person in order to support government programs.
D)taken from business in order to pay for unemployment insurance programs.

Question 34

If the citizens got together for a city referendum on the issue, and each voted for an amount of fireworks, knowing that each would pay their share (1/3) of the cost, how would the vote come out in a majority rule situation? Why is this not the socially efficient amount?

Question 35

If the city father (Elmer), true statesman that he is, tried to work toward efficiency by structuring a user benefit tax on the July 4 display, and if he were able to assess accurately the benefits received, how would he tax the citizens?

Question 36

When the nonexclusion aspect of a public good does not hold, but the zero marginal cost component is present, how might the free rider problem be overcome and social efficiency achieved? Give examples from common social practice to illustrate your answer.

Question 37

One way to verify that 11 is the socially optimal outcome in Flagston is to compare the consumer surplus gained by an output of 11 with the consumer surplus received when the majority voting equal pay outcome of 10 is bought.How much consumer surplus is gained by the 11th firecracker?

Question 38

If the fireworks show is left to the private marketplace, what is likely to happen?

Question 39

The median voter is a voter:

A)Who usually vote with the majority
B)Whose preference represent the middle point of all voter's preferences
C)Who usually never votes
D)Who usually vote based on principle rather than logic