Question 1

According to the text, one formula for political success is to:

Accepted Answer

Concentrating benefits allows politicians to target a specific group of voters with something they want or need, while diffusing costs makes it less likely that any particular group of voters will be outraged enough to oppose the politician. This balance is more likely to result in political success.

Question 2

The main reason that government legislation on sugar quotas passes is that:

Accepted Answer

The answer of The main reason that government legislation on...

Question 3

Ten farmers, in a society with 100 people, would collectively gain $100,000 from a farm subsidy. All 100 people would pay the $300,000 cost of the subsidy program. Are the farmers willing to lobby the government in support of the subsidy?

Accepted Answer

The answer of Ten farmers, in a society with 100...

Question 4

The self-interest of politicians ______ with the social interest.

Accepted Answer

Sometimes politicians' self-interest aligns with the social interest, but it is not always the case. In some cases, politicians may prioritize their own interests, such as winning reelection or gaining power, over the needs and wants of their constituents. However, there are also instances where politicians may act in the best interest of society in order to maintain a positive reputation or to promote the well-being of their community. Therefore, the relationship between the self-interest of politicians and social interest can vary depending on the specific circumstances.

Question 5

When benefits are highly concentrated, but costs are diffused across a large number of people:

Accepted Answer

The answer of When benefits are highly concentrated, but costs...

Question 6

Political contributions suggest that PACs are rationally:

Accepted Answer

Political Action Committees (PACs) are formed with the intention of influencing political decisions by contributing funds to political candidates. To effectively achieve their goal, PACs must be informed about the political landscape and the policies of the candidates they support. Therefore, it can be concluded that PACs are rational and informed in their political contributions.

Question 7

According to public choice theory, the main reason for some politicians' ability to build support for policies that generate more costs than benefits is that

Accepted Answer

According to public choice theory, rational ignorance plays a significant role in situations where the benefits of a policy are concentrated on a particular group while the costs are dispersed across the entire population. Since it is costly for individuals to acquire and process information, they may choose not to fully educate themselves on the issue, leading to a lack of opposition to policies that may do more harm than good.

Question 8

Representative John Murphy has secured around $200 million of federal government money for a small airport near Juneburg, PA, that averages about 30 passengers a day. The costs of this government support:

Accepted Answer

The fact that only 30 people use the airport on a daily basis means that the costs of the government support are not justified based on the number of users. Therefore, the cost would mostly be paid by taxpayers who will never use the airport, making it an external cost.

Question 9

Much to the chagrin of some Americans, conventional light bulbs were effectively banned in 2014 leaving only compact florescent lights (CFLs) on store shelves. The ban was encouraged, in part, by the makers of the more expensive CFLs. Which concept is best captured in this story?

Accepted Answer

The story exemplifies the concept of diffused costs and concentrated benefits, as the ban on conventional light bulbs primarily benefitted the makers of more expensive CFLs, while causing inconvenience to some Americans who preferred the cheaper option.

Question 10

Special interest groups are rationally:

Accepted Answer

Special interest groups are formed by individuals who share a common interest or goal, and they typically have a wealth of knowledge and information about their specific issue or cause. They are often well-organized and well-funded, allowing them to actively promote their interests and influence policy decisions. Therefore, special interest groups are generally informed rather than ignorant. While they are concerned about their particular issue, their primary goal is often to advance their own interests rather than to be cooperative with others.

Question 11

In the case of the sugar quota, those harmed are rationally ______ and those benefitted are rationally ______.

Accepted Answer

The answer of In the case of the sugar quota,...

Question 12

The American Crystal Sugar PAC is rationally:

Accepted Answer

The American Crystal Sugar PAC is likely to be informed, as PACs or political action committees are established by organizations, businesses, or individuals to collect funds and make donations to political campaigns or candidates. This means that the PAC is likely to have done research on the candidates and their policies before making any donations.

Question 13

The acronym PAC stands for:

Accepted Answer

The acronym PAC stands for Political Action Committee.

Question 14

Although many people, from economists to environmentalists, oppose ethanol subsidies on grounds that it is inefficient and harms the environment, politician Mitt Romney once said, "I support the subsidy of ethanol. I believe it's an important part of our energy solution in this country." Why does Mr. Romney support ethanol subsidies?
I. Most of the people harmed by the subsidies are rationally ignorant and thus don't oppose the policy.
II. The benefits of the subsidy are concentrated among a group of producers who provide political and financial support to politicians who support the subsidies.
III. Mr. Romney's support of ethanol subsidies is not only in his self-interest but also in the public's interest.

Accepted Answer

Mr. Romney's support for ethanol subsidies is likely due to the fact that the benefits of the subsidy are concentrated among a small group of producers who provide political and financial support. Meanwhile, the costs are dispersed among many people who are not directly affected, making them less likely to oppose the policy. Additionally, there is little evidence to suggest that ethanol subsidies are in the public's interest, as they are inefficient and can harm the environment.

Question 15

In 2011, police in Appleton, WI, shut down a lemonade stand run by two young girls. The girls, who live near the venue for the annual Appleton Old Car Show, were subject to a recent ordinance that barred anyone from selling products within a two-block radius from local events. Local Alderman Peter Stueck defended the law, saying, "It's certainly not that Appleton is against little girls setting up their cookie and lemonade stands. But the overall intent of the ordinance was to protect the vendors at these events."
Which concept best explains why this law had support to begin with?

Accepted Answer

The concept of diffuse costs and concentrated benefits best explains why this law had support to begin with. The vendors at the local events would benefit from having exclusive rights to sell their products within a two-block radius, while the costs of enforcing this ordinance fell on the young girls running the lemonade stand and other similar small-scale sellers. As a result, the vendors had a concentrated benefit and were likely to lobby for the ordinance, while the young sellers had a diffuse cost and were less likely to fight against it.

Question 16

The fall of the Roman Empire was partially attributable to:

Accepted Answer

High taxes were used to finance projects with benefits that were less than their costs, leading to financial strain on the empire. This is seen as one of the main contributing factors to the fall of the Roman Empire.

Question 17

In the case of the sugar quota, costs are ______ and benefits are ______.

Accepted Answer

The answer of In the case of the sugar quota,...

Question 18

The "Bridge to Nowhere"

Accepted Answer

The "Bridge to Nowhere" refers to a real-life proposal for a bridge in Alaska that would have cost taxpayers $320 million, despite the availability of a ferry service that charged only $6 per automobile. The proposal was highly controversial and became a symbol of government waste and excessive spending.

Question 19

When the costs of a good are paid for by nonconsumers, ______ of the good is produced.

Accepted Answer

The answer of When the costs of a good are...

Question 20

Politicians have a strong incentive to support projects even when their costs outweigh their benefits if:

Accepted Answer

Politicians have a stronger incentive to support projects when the costs are spread widely across taxpayers and the benefits are concentrated on a small group. This is because the small group that benefits from the project may be more motivated to support the politician or provide campaign contributions, whereas the taxpayers who are paying for the project may not be as motivated to oppose the politician. This creates a situation where the costs outweigh the benefits, but the politician still supports the project to curry favor with the small group benefiting from it.

Quiz 21: Political Economy and Public Choice