Question 1

(Consider This) Smaller groups are sometimes able to achieve political victories against larger groups.This is referred to as the

Accepted Answer

The collective action problem refers to the difficulty that arises when a large group of people must coordinate their efforts to achieve a common goal. In contrast, smaller groups may find it easier to mobilize and coordinate their efforts, potentially allowing them to achieve political victories against larger groups.

Question 2

Which of the following would best explain why regulatory capture is a problem?

Accepted Answer

Regulatory capture occurs when the industry being regulated gains influence over the regulating agency, leading to regulations that primarily serve the interests of the industry rather than addressing broader social goals such as consumer safety and environmental protection. This undermines the effectiveness of regulation and can harm public welfare.

Question 3

Which of the following would be the best example of regulatory capture?

Accepted Answer

Regulatory capture occurs when the industry being regulated essentially gains control over the regulatory agency. In option D, executives from the three largest American car companies writing rules regulating automobile safety and fuel requirements gives them a significant amount of control over the regulation of their own industry. This creates a potential conflict of interest, and ultimately undermines public trust in the regulatory agency.

Question 4

Regulatory capture often occurs because of which of the following?

Accepted Answer

Regulatory capture often occurs when the individuals or entities with the most expertise in a particular industry end up working for the government agencies responsible for regulating that industry. This can lead to a situation where the regulators become too cozy with the regulated entities, resulting in weakened regulation or regulations that are more favorable to the industry.

Question 5

"Earmarks" refer to

Accepted Answer

Earmarks are authorized expenditures benefiting a narrow, specifically designated group that are included in more comprehensive spending legislation. It is a way for members of Congress to direct funding to specific projects or organizations in their districts or states. Earmarks have been controversial as they can be seen as a form of pork-barrel spending and can lead to wasteful use of funds.

Question 6

Political corruption occurs whenever

Accepted Answer

Political corruption occurs when government officials use their positions for personal gain, such as unlawfully misdirecting governmental resources to benefit themselves. While the other options can also be unethical or inappropriate, they do not necessarily involve personal gain by government officials.

Question 7

Which of the following will tend to socialize losses and privatize gains?

Accepted Answer

Government guarantees to private investors that they will get their money back even if the company fails will tend to socialize losses because the government will be responsible for paying back the investors if the company fails, while the gains will be privatized by the investors receiving their money back.

Question 8

(Consider This) The collective action problem refers to

Accepted Answer

The collective action problem refers to the difficulty in organizing and motivating large groups to achieve desired outcomes. This can occur because individuals may not see the benefit of contributing to a group effort if they can enjoy the benefits regardless of whether or not they contribute, or because individuals may free ride on the efforts of others, expecting someone else to do the work. This results in a lack of collective action and may lead to suboptimal outcomes.

Question 9

(Last Word) In 2011, Congress funded a sanctuary for white squirrels, a giant roadside coffee pot, and an antique bicycle museum.These are examples of

Accepted Answer

These examples represent pork barrel politics, where government funds are allocated to projects based on their potential to benefit a particular politician or district, rather than their overall value to society. This often results in the funding of unnecessary or frivolous projects in order to secure votes or support from constituents.

Question 10

Under what circumstances would government loan guarantees be socially beneficial?

Accepted Answer

The answer of Under what circumstances would government loan guarantees...

Question 11

(Consider This) From an economist's perspective, when is government too big?

Accepted Answer

From an economist's perspective, government is too big when the marginal costs from additional government spending exceed marginal benefits. This means that after a certain point of government spending, the additional benefits gained from it will be smaller than the costs incurred to provide them. Therefore, to maximize economic efficiency, government spending should be limited to the point where the marginal benefits equal the marginal costs.

Question 12

(Consider This) From an economist's perspective,

Accepted Answer

From an economist's perspective, what matters is achieving allocative and productive efficiency, which occurs when marginal benefit (MB) equals marginal cost (MC). The size of government doesn't matter, as long as spending occurs up to that point. Therefore, choice D is the correct answer.

Question 13

In 2015, U.S.federal government legislation authorized

Accepted Answer

In 2015, the U.S. federal government legislation authorized 105 earmarks, totaling $4.2 billion.

Question 14

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills, trusts, and other legal documents.This is an example of

Accepted Answer

This is an example of rent-seeking behavior, where lawyers are trying to limit competition by seeking legislation that favors their own interests over the interests of consumers who benefit from using computer software to self-prepare their own legal documents.

Question 15

Deregulation

Accepted Answer

Deregulation can lead to improvements through an increase in competition, but it is not always the case that it generates greater economic efficiency. Additionally, government agencies responsible for human safety, financial regulation, and environmental protection may require regulation to ensure public welfare. However, eliminating regulatory capture, where regulators are captured by the industry they are regulating, can improve outcomes in industries with negative externalities. Therefore, option B is the best choice as it identifies the potential benefits of deregulation while taking into account the need for appropriate regulations.

Question 16

The Road Runner Club contributes money to Senator Sly's reelection campaign fund, and Senator Sly helps pass legislation to add more jogging paths across the state.From this we can definitively conclude

Accepted Answer

The information given does not necessarily imply corruption, logrolling, or a principal-agent problem. It's possible the Road Runner Club donated to Senator Sly because he already supported the addition of jogging paths, indicating a shared interest rather than a corrupt exchange.

Question 17

(Consider This) According to a 2015 study, health and safety violations are more prevalent in public companies because

Accepted Answer

The answer of (Consider This) According to a 2015 study,...

Question 18

The government's ability to force people to do things can increase economic efficiency.

Accepted Answer

The government has the power to impose laws and regulations that can incentivize certain behaviors or outcomes, such as paying taxes or following safety standards. This can lead to more efficient use of resources, as individuals and businesses are compelled to act in a way that benefits society as a whole. However, this must be balanced with concerns about individual freedoms and government overreach.

Question 19

Proponents of deregulation point to all of the following industries as examples of successful deregulation except for

Accepted Answer

Proponents of deregulation generally point to airlines, railroads, and interstate trucking as examples of successful deregulation. However, deregulation of the pharmaceutical industry has been more controversial and is not typically cited as a success by deregulation proponents.

Question 20

Which of the following is considered a potential solution to some regulatory capture?

Accepted Answer

The answer of Which of the following is considered a...

Quiz 5: Governments Role and Government Failure