Question 1

The fall of the Roman Empire was partially attributable to:

Accepted Answer

High taxes were used to finance projects that were not economically beneficial, leading to a drain on the economy. This contributed to the fall of the Roman Empire as their economy could no longer sustain itself.

Question 2

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 3

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 based on the fact that the benefits of the subsidy are concentrated among a group of producers who provide political and financial support to politicians who support the subsidies (II). This is known as rent-seeking behavior. It is unlikely that Mr. Romney's support for the subsidies is solely based on the public's interest (III) since the subsidy is inefficient and harms the environment. The idea that most people harmed by the subsidies are rationally ignorant (I) may be true, but it is not the main reason why Mr. Romney supports the subsidies.

Question 4

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 support for this law can be explained by the concept of diffuse costs and concentrated benefits. The vendors at the local events benefit directly from this law by having less competition from other sellers, while the costs of the law are spread out among the general public, including the two young girls running their lemonade stand. Those who would be adversely affected by the law, such as the young girls, likely do not have enough concentrated power to influence the decision-making process in their favor.

Question 5

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 6

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 7

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 8

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 9

The acronym PAC stands for:

Accepted Answer

PAC stands for political action committee.

Question 10

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 11

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 cost of this government support represents an external cost paid mostly by taxpayers who will never use the airport since the airport only serves an average of 30 passengers a day. This means that the benefits are not reaching a large number of people, but the costs are being spread across all taxpayers.

Question 12

Special interest groups are rationally:

Accepted Answer

Special interest groups are typically informed about the topics and issues that they advocate for. They often have specific expertise or knowledge in their area of focus, which allows them to be effective in advancing their interests.

Question 13

The "Bridge to Nowhere"

Accepted Answer

The "Bridge to Nowhere" refers to a proposed bridge in Alaska that would have cost a significant amount of taxpayer money, despite the availability of a much cheaper ferry service. The project was widely criticized for its high cost and lack of necessity, and ultimately, the plans were scrapped.

Question 14

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

Accepted Answer

When the costs of a project are spread widely across taxpayers and the benefits are concentrated on a small group, politicians can offer benefits to that group in exchange for their support or campaign donations. Since the cost is spread out, it may not cause a significant outcry from the general public, making it easier for politicians to support the project without facing too much opposition.

Question 15

Political contributions suggest that PACs are rationally:

Accepted Answer

Political contributions suggest that PACs are informed, as they are making calculated decisions about where to allocate their resources based on their political agenda and the perceived potential impact of their contributions.

Question 16

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 concept of diffused costs and concentrated benefits is best captured in this story as the makers of CFLs stood to benefit from the ban and likely lobbied for it, while the cost was diffused among consumers who had to switch to the more expensive bulbs.

Question 17

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

Accepted Answer

Sometimes politicians can act in ways that serve both their self-interest and the social interest. For example, implementing policies that are popular with their constituents can lead to their re-election, which serves their self-interest, while also benefiting society as a whole. However, there are also instances where the self-interest of politicians conflicts with the social interest, such as accepting bribes or implementing policies that benefit a select few at the expense of the majority. Therefore, it cannot be said that their interests always align or never align. Direct democracy may increase the alignment of self-interest with social interest, as it allows for more direct accountability to the people, but it is not a guarantee.

Question 18

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

Rational ignorance refers to the idea that individuals choose not to become fully informed about policies because the cost of doing so outweighs the potential benefit. In situations where the costs are dispersed across many individuals but the benefits are concentrated on a smaller group, those who benefit have a greater incentive to become informed and lobby for the policy, while those who are affected by the costs but not the benefits are less likely to become informed and mobilize against it. This can lead to policies that generate more costs than benefits being implemented.

Question 19

The American Crystal Sugar PAC is rationally:

Accepted Answer

Based on the use of "rational" in the statement, it can be inferred that the American Crystal Sugar PAC is informed and makes decisions based on reason and logic rather than emotion or bias.

Question 20

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

Accepted Answer