Question 1

What is the term that explains why voters often lack knowledge of pending legislation, and lack knowledge of the views of candidates for office on a range of issues that affect their own (the voters') welfare?

Accepted Answer

Rational ignorance is the term used to describe why voters may choose not to acquire knowledge on pending legislation or the views of candidates on certain issues. This is because the cost of acquiring this knowledge, such as time and effort, can often outweigh the potential benefit or impact on the individual voter's own welfare.

Question 2

The public choice model raises questions about the government's ability to regulate economic activity efficiently. Which of the following statements represents the views of most economists with regard to the role of government?

Accepted Answer

Most economists believe that the government has a role in regulating economic activity, but that it must balance the benefits of regulation with the costs. The public choice model highlights the potential for regulatory capture and rent-seeking behavior, but this does not mean that all regulation should be abolished. Instead, economists typically argue for careful consideration of the costs and benefits of specific regulations to determine whether they are in the public interest.

Question 3

Some individuals seek to use government action to make themselves better off at the expense of others. The actions of these individuals

Accepted Answer

Rent seeking refers to the actions of individuals or groups who use government intervention to gain an advantage over others, often at the expense of the broader society. This behavior can include seeking rents (financial gain) through subsidies, price controls, and other forms of government intervention. Hence, the individuals seeking to use government action to make themselves better off at the expense of others represents rent-seeking behavior.

Question 4

A key insight of the public choice model is that public policymakers are likely to pursue the public's interest, even if their self-interests conflict with the public interest.

Accepted Answer

The key insight of the public choice model is that public policymakers are likely to pursue their own self-interests, which may not coincide with the public interest.

Question 5

Which of the following is used to argue that the self-interest of public policymakers will often lead to actions that are inconsistent with the preferences of the voters they represent?

Accepted Answer

The answer of Which of the following is used to...

Question 6

Which of the following statements refers to rent seeking?

Accepted Answer

Rent seeking refers to the practice of seeking to increase one's share of existing wealth without creating new wealth. In this statement, the individuals are seeking benefits from laws passed by the government, which is an example of rent seeking behavior. The other statements do not specifically refer to rent seeking.

Question 7

Economists often analyze the interaction of individuals and firms in markets. Economists also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as

Accepted Answer

Rent seeking refers to the activities of individuals and firms to use the political process and government regulations to secure benefits for themselves at the expense of others. This process often results in economic inefficiencies and can lead to the misallocation of resources.

Question 8

Congressman Flack votes for a program that will benefit the constituents of Congressman Walpole. Which of the following explanations for Flack's vote is most consistent with the public choice model?

Accepted Answer

This explanation is consistent with the public choice model's emphasis on legislators acting on their self-interest and seeking to maximize their chances of reelection. By voting for Congressman Walpole's program, Congressman Flack expects to gain Walpole's support for programs that will benefit Flack's own constituents.

Question 9

The public choice model can be used to examine voting models that contrast the manner in which collective decisions are made by governments (state, local, and federal) and the manner in which individual choices are made in markets. Which of the following descriptions is consistent with the difference between collective decision-making and decision-making in markets?

Accepted Answer

The answer of The public choice model can be used...

Question 10

Which of the following is a consequence of the voting paradox?

Accepted Answer

The voting paradox leads to inconsistent and non-transitive voting outcomes, which means that when the preferences of the voters are compared, there is no clear or consistent winner. This can lead to confusion and dissatisfaction among voters, as their preferred candidate may not win even though they have a majority of the votes.

Question 11

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Accepted Answer

This is because the political market involves government involvement and the allocation of resources through political decisions, rather than purely based on supply and demand. This can result in certain individuals or groups receiving significant benefits, such as tax breaks or subsidies, without necessarily paying more in taxes.

Question 12

One result of the public choice model is that most economists believe that

Accepted Answer

The public choice model suggests that policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency. This is because politicians are often motivated by their own self-interests and may prioritize their own political gain over promoting the common good. As a result, government intervention may not always lead to a more efficient outcome and may even result in a reduction of economic efficiency in regulated markets.

Question 13

Congressman Flack votes for a program that will benefit the constituents of Congressman Walpole. The public choice model suggests that Flack's vote is best explained by which of the following?

Accepted Answer

Congressman Flack's vote can be explained by logrolling, which is the practice of exchanging favors or mutual support, often with fellow legislators, in order to gain advantage or pass legislation. It is possible that Congressman Walpole offered support for one of Flack's initiatives in exchange for his vote on this particular program.

Question 14

If voters lack an economic incentive to become informed about pending legislation, then their preferences become a constraint on legislators voting for rent-seeking legislation.

Accepted Answer

This statement is incorrect. Even if voters lack an economic incentive to become informed about pending legislation, their preferences can still be manipulated or influenced by lobbyists or interest groups who do have a financial stake in the outcome. This can result in legislators voting for rent-seeking legislation that benefits these groups, despite a lack of economic incentive for voters to become informed.

Question 15

Many economists believe that when the federal government establishes an agency to regulate a particular industry, the regulated firms try to influence the agency even if these actions do not benefit the public. Economists refer to this result of government regulation by which of the following terms?

Accepted Answer

Regulatory capture is the term used by economists to describe the phenomenon of regulated industries influencing regulatory agencies, often to the detriment of the public interest. These industries may, for example, lobby regulators to loosen regulations, delay the implementation of new regulations, or appoint sympathetic regulators to key positions. This can result in a situation where the regulatory agency becomes captured by the industry it is supposed to be regulating, leading to a lack of effective oversight and potential harm to consumers.

Question 16

According to the median voter theorem, the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle.

Accepted Answer

According to the median voter theorem, the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle. This is because the candidate who is most closely aligned with the median voter will have the greatest chance of winning the election.

Question 17

The median voter theorem states that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle.

Accepted Answer

The median voter theorem states that, in a two-candidate election, the candidate who is preferred by the median voter is likely to win because they appeal to the largest number of voters, including those with more extreme views. This means that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle, as they hold the swing vote.

Question 18

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are

Accepted Answer

Financial contributions to campaigns by firms seeking special interest legislation are an example of rent seeking, as they are attempting to influence the political process for their own benefit rather than the benefit of the public as a whole.

Question 19

The public choice model asserts that the self-interest of policymakers is likely to cause them to take actions that are inconsistent with the preferences of voters, even where those preferences are clear.

Accepted Answer

The public choice model posits that policymakers may prioritize their own interests over the preferences of voters, resulting in policy outcomes that are not aligned with what the majority of voters want.

Question 20

Which of the following is an example of rent seeking behavior?

Accepted Answer

The U.S. sugar firms convincing Congress to impose a quota on imports of sugar is an example of rent seeking behavior. This is because the firms are seeking to use government intervention to limit competition and increase their profits, rather than relying on market forces to determine their success.

Quiz 18: Public Choice, Taxes, and the Distribution of Income