Question 1

Which of the following statements refers to rent seeking?

Accepted Answer

Rent seeking is the use of resources, such as time and money, to obtain wealth through the political process instead of through creating new wealth. In this case, the small number of individuals are seeking benefits through contributions to politicians who pass laws that provide them with those benefits.

Question 2

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 the outcome of a majority vote tends to represent the preferences of the voter who is in the political middle or the median voter. This is because candidates or policies that are too extreme are less likely to win a majority vote. As a result, candidates or policies tend to converge towards the preferences of the median voter in order to win elections.

Question 3

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 actions of individuals or firms who attempt to obtain economic benefits from the government by manipulating public policy or exploiting government regulations. This process is often detrimental to the overall welfare of society, as it results in economic inefficiencies and waste.

Question 4

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 5

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

Accepted Answer

Rent seeking behavior involves using political influence or other non-productive means to gain wealth or advantages. In this case, U.S. sugar firms used their political influence to persuade Congress to impose a quota on sugar imports, giving them an advantage in the domestic sugar market. A and B are examples of profit-seeking behavior, which is a legitimate goal of businesses in a market economy. D is an example of rational ignorance, where voters may not be fully informed on an issue, but it does not involve rent seeking behavior.

Question 6

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

In the political market, some individuals may receive benefits such as government contracts, subsidies, or regulations that favor their business or industry without having to pay significantly higher taxes. This is because the cost of these benefits may be distributed among the general population, allowing those who receive them to reap large rewards without directly paying for them.

Question 7

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 is engaging in logrolling, which is the practice of exchanging political favors, in this case, voting for a program that benefits Congressman Walpole's constituents in exchange for a future favor. This behavior is rational under the public choice model because it benefits both congressmen, even though it may not be in the best interest of the overall population.

Question 8

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 assumes that policymakers act in their own self-interest, which may not always align with the preferences of the voters. This can result in policy decisions that contradict the desires of the electorate.

Question 9

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 backwards. If voters lack an economic incentive to become informed, it becomes easier for legislators to vote for rent-seeking legislation, as they will not face electoral consequences for doing so. When voters are well-informed, they can use their voices and votes to hold legislators accountable for their actions, providing a disincentive for rent-seeking behavior.

Question 10

When the majority of voters have preferences very different from those of the median voter,then the median voter theorem will lead to accurate predictions of the outcomes of elections.

Accepted Answer

The median voter theorem assumes that the preferences of the majority of voters are similar to those of the median voter. If the majority of voters have preferences very different from the median voter, the theorem may not accurately predict election outcomes.

Question 11

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 refers to the phenomenon where a regulatory agency created to serve the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. This results in the regulation benefiting the regulated firms instead of the public.

Question 12

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

Accepted Answer

The voting paradox refers to the phenomenon where the collective preferences of voters are not transitive, meaning that the outcome of the voting process can be inconsistent. This can lead to situations where a majority of voters do not elect the candidate that represents their preferences, as indicated in option A, but it can also lead to other consequences such as instability in the political system and difficulties in making collective decisions. Options B and C refer to other problems in the political process, but they are not directly related to the voting paradox.

Question 13

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

The public choice model suggests that politicians act in their own self-interest, and one way to do this is to engage in vote trading or logrolling. Congressman Flack may have voted for a program that benefits Congressman Walpole's constituents because he expects support from Walpole in passing programs that benefit Flack's own constituents. This explanation is consistent with the public choice model.

Question 14

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 government regulation can serve a useful purpose in addressing market failures, such as the negative externalities associated with pollution or the information asymmetry associated with consumer goods. However, they also recognize that regulation can come with costs, such as increased compliance costs for businesses and decreased innovation. Therefore, economists argue that regulations should be designed to balance the benefits and costs, taking into account both the impact on economic efficiency and the welfare of consumers and society as a whole. This view is consistent with choice (D), which acknowledges the potential usefulness of government agencies such as the FDA and EPA but also calls for a cost-benefit analysis of regulations. The other options either advocate for extreme positions (choice A) or ignore the complexities of the issue (choice B) or assume a controversial policy position (choice C).

Question 15

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

Accepted Answer

The actions described fit the definition of rent seeking, which involves using government action to obtain economic gain at the expense of others. This behavior is often seen in lobbying efforts and can result in harmful policies for society as a whole.

Question 16

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 17

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, even if it conflicts with the public interest.

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 elected officials by firms seeking special interest legislation is an example of rent seeking, which is the use of resources to secure favorable government treatment rather than to create wealth. It is a common practice in politics and is often seen as a form of corruption. The firms hope that their donations will persuade elected officials to create laws that benefit their business interests, even if it comes at the expense of the general public.

Question 19

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 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 welfare. Rational ignorance refers to the idea that it is rational for individuals to remain uninformed about certain issues, such as politics, because it takes time and effort to acquire information and this may not necessarily lead to any personal gain. As a result, voters may prioritize other activities or issues that they deem more important to their daily lives.

Question 20

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 they may be influenced by special interests, desire for reelection or personal gain, rather than the public interest. The model acknowledges that government intervention can sometimes be necessary to address market failures, but it also highlights the potential for unintended consequences and inefficiencies resulting from ill-conceived policies. Option A is incorrect because government intervention can sometimes lead to more efficient outcomes, but not always. Option B is incorrect because it implies that government intervention always reduces economic efficiency, which is not necessarily true. Option D is also incorrect because the voting paradox refers to a situation where collective decision-making may be inefficient, but it does not necessarily prevent voters from selecting the best person for public office.

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