Question 1

For every gift that A gives to B from the first to the tenth gift,A receives a net benefit of $10.The additional cost to A of giving an additional gift is constant at $5.It follows that A's marginal benefit curve for giving gifts to B is ___________________ (assuming that we place "marginal benefits" on the vertical axis and "number of gifts" on the horizontal axis).

Accepted Answer

A's marginal benefit from giving each gift is constant at $10, regardless of the number of gifts given, making the marginal benefit curve horizontal.

Question 2

Economists often evaluate a theory in terms of how consistently and accurately it predicts what happens.Implicit in this position is the belief that

Accepted Answer

The statement implies that consistent and accurate predictions are an indication of the theory's explanation, acceptance, and capture of essential assumptions. Therefore, all of the options are correct.

Question 3

We state that the evidence __________________ if evidence is consistent with a theory's predictions.

Accepted Answer

Failing to reject a theory means that the evidence is consistent with the predictions of the theory. It does not necessarily prove that the theory is correct, but it also does not prove that the theory is invalid. Therefore, option A is the best answer.

Question 4

The larger a percentage of the population a person is,the ______________ likely that person will have to further engage with people she meets.This implies that she will generally be ____________ likely to behave unethically and poorly with the people in her town as the population of her town increases.

Accepted Answer

As the percentage of the population a person is increases, the more people she is likely to meet, and therefore the more likely she is to have to further engage with them. This implies that she will generally be more likely to behave unethically and poorly with the people in her town as the population of her town increases, as there are simply more opportunities for her to do so.

Question 5

In the burglary crime model presented in the textbook,as the anguish cost of committing a burglary rises,the prediction is that

Accepted Answer

The model predicts that as the anguish cost of committing a burglary rises, fewer people will commit burglary. This is because the increased risk and negative consequences associated with committing the crime outweigh the potential benefits. Thus, potential burglars are deterred from committing the crime.

Question 6

Smith says that criminals are rational and that they consider both the benefits and costs of criminal activity.Jones disagrees.He says criminals are irrational and can't possibly be considering both the benefits and costs of criminal activity.If they did,he argues,they wouldn't be criminals.An economist who wants to figure out if criminals are rational,would most likely build a

Accepted Answer

Building a falsifiable theory based on the assumption that criminals are rational and then testing the theory is the scientific approach to answering the question of whether criminals are rational or not. This approach would allow an economist to gather evidence and determine whether the assumptions of the theory hold up under scrutiny, which would provide insight into the rationality of criminals. B, C, and D are not as strong choices because they do not involve testing the theory, which is necessary for determining its validity.

Question 7

Kristie currently spends her $1,000 a week income as follows: $500 on X,$300 on Y,and $200 on Z.Her mother then gives her a $100 bill and tells her to use it to buy more Z.Kristie actually takes the $100 her mother gave to her,adds $40 to the $200 she usually spends on Z,and buys $240 worth of Z.Did Kristie's mother's $100 go to buy only Z?

Accepted Answer

Kristie usually spends $200 on Z, but with the extra $140 ($100 from her mother and $40 from her own money), she spends $240 on Z. This means that the additional $100 from her mother didn't go solely towards buying more Z, as she needed to use some of her own money to reach the $240 total. Therefore, the answer is B.

Question 8

A man moves from a large city to a small town.In the small town he seems like a very different person than the person he was in the big city.For instance,he is more polite in the small town than he was in the big city.This could be because

Accepted Answer

The costs of being impolite may be higher in the small town where people are more closely connected and reputation matters more than in the big city where people are more anonymous. Also, happiness and social satisfaction are more likely to be correlated with being polite in the small town where social relationships are more important than in the big city where individual achievement and independence are more valued.

Question 9

"The theory's predictions are consistent with what I believe,so now I have good reason to believe what the theory says." This statement is likely to have been made by a person who believes that

Accepted Answer

The statement reflects a confirmation bias, where the person is inclined to believe in a theory because it aligns with their pre-existing beliefs, rather than because it has been empirically tested or is falsifiable. This approach does not align well with the scientific methods described in options A, B, and C, which emphasize empirical testing, description of reality, and falsifiability, respectively.

Question 10

The efficient number of gifts that a gift-giver wants to give is the number at which the marginal benefits of giving a gift are__________________the marginal costs of giving a gift.

Accepted Answer

The efficient number of gifts that a gift-giver wants to give is the number at which the marginal benefit of giving a gift is equal to the marginal cost of giving a gift. At this point, the gift-giver is maximizing their overall satisfaction while minimizing their costs. If the marginal benefits are greater than the marginal costs, the gift-giver should give more gifts until the marginal costs increase to equal the marginal benefits. If the marginal costs are greater than the marginal benefits, the gift-giver should give fewer gifts until the marginal benefits increase to equal the marginal costs. Therefore, the best choice is C, as it represents the ideal balance between the two.

Question 11

Which of the following can a homebuyer pay for indirectly when purchasing a home?

Accepted Answer

The homebuyer cannot directly pay for good weather, a good school district, or a nice view. However, these features can increase the value of the home and impact the price that the homebuyer pays indirectly. For example, a home in a desirable school district may be priced higher due to demand from families with children, even though the homebuyer is not directly paying for the quality of the school district. Therefore, all of the options listed are indirect costs that can affect the price a homebuyer pays for a home.

Question 12

It often appears as if there are "too few" workers at the Department of Motor Vehicles (DMV)to service all of its customers at a given point in time.Based on one of theories discussed in the textbook,this is probably because

Accepted Answer

The correct answer is based on the concept of supply and demand. When the equilibrium price to be served by the DMV is higher than the price charged to customers (which could be considered as the cost of waiting time, fees, etc.), it indicates that the demand for DMV services exceeds the supply at that price point. This results in longer wait times and the perception of there being "too few" workers to meet the demand.

Question 13

If a person gives a gift to another person,an economist would say that it is because

Accepted Answer

According to the economic theory of rational decision making, a person will only take an action (in this case, giving a gift) if the marginal benefit of that action is greater than or equal to the marginal cost of that action. Therefore, option A is correct as it states that the marginal benefit of giving the gift is at least as great as the marginal cost of giving the gift. Options B and C are incorrect as they do not accurately reflect the economic reasoning behind gift-giving.

Question 14

George is a gift giver and Roger is a gift recipient.George has Roger in his utility function,but Roger does not have George in his utility function.Roger may try to get George to __________________ George's efficient number of gifts to (give).

Accepted Answer

Since George has Roger in his utility function but Roger does not reciprocate, Roger may try to manipulate the situation to either get George to give more gifts than George's efficient number or to increase the number of gifts he receives beyond George's efficient number. Both options aim at benefiting Roger, exploiting the fact that George values Roger's happiness.

Question 15

Theory A predicts that the higher the opportunity cost of having a child,the fewer children a woman will have.Which of the following is evidence against the theory if opportunity cost is measured in terms of foregone salary?

Accepted Answer

Choice A is evidence against the theory because it contradicts the prediction that higher opportunity costs (in terms of foregone salary) lead to fewer children. If women with high-paying jobs (and thus higher opportunity costs) have more children, it goes against the theory's prediction.

Question 16

In general,a dry cleaner in a small town is ______________ likely to be unethical in his business practices than a dry cleaner in a large city.This is because the larger a percentage of the population one person is,the _____________likely that person will have to further engage with people he encounters.

Accepted Answer

In smaller towns, individuals are more likely to encounter the same people repeatedly due to the smaller population size. This increases the likelihood of ethical behavior since maintaining a good reputation is more crucial in such close-knit communities. Conversely, in larger cities, the chance of repeated interactions with the same individuals is lower, potentially reducing the immediate need for ethical conduct.

Question 17

People sometimes act differently in different settings.An economist is likely to explain this by saying

Accepted Answer

Economists often consider the costs and benefits of different actions in different situations, which could explain why people act differently in different settings.

Question 18

Anna gives Billy a gift of $200.We can be sure that Billy will

Accepted Answer

We cannot determine what Billy will spend the money on based on the information given, but it is safe to assume that he will spend it on something he wants or needs, rather than saving it all or spending it on something Anna specifically does not want him to buy. Therefore, choice C, that he will spend the $200 on whatever is next on his list of things to buy, is the best choice.

Question 19

The ______________ the gap between the tuition a college student pays and the equilibrium tuition for that college,the _____________ likely the student's instructors will be on time and attentive during their office hours.

Accepted Answer

The correct answers are A) larger; less and B) smaller; more. This is because when the gap between what a student pays and the equilibrium tuition is larger, resources may be more constrained, potentially leading to less attentive instructors. Conversely, when the gap is smaller, it implies a closer alignment with the equilibrium, suggesting better resource allocation that could lead to more attentive instructors.

Question 20

House A has an ocean view and House B does not.In all other respects,the two houses are the same.The market price of house A is $2,800,000;the market price of house B is $2,600,000.The ocean view is therefore valued at

Accepted Answer

The difference in price between House A and House B is solely attributed to the ocean view, as all other aspects are the same. Therefore, the ocean view is valued at $200,000 (the difference in price).

Quiz 20: Public Choice and Special-Interest-Group Politics