Question 1

Explain why all voters will have single-peaked preferences for a pure public good if the marginal benefit they receive from that good declines as more is made available per year. Explain how each voter decides whether to vote in favor of or against a proposal for a certain quantity of the pure public good to be made available per year. Assuming that tax shares are given, what can you say about the political equilibrium under majority rule Show how an increase in the average cost of producing the pure public good will affect the political equilibrium.

Accepted Answer

The answer of Explain why all voters will have single-peaked...

Question 2

Which of the following collective choice rules is likely to incur the highest political transactions costs

Accepted Answer

Unanimous consent requires agreement from all parties involved, making it the most difficult to achieve and thus incurring the highest political transaction costs.

Question 3

A voter's most-preferred political outcome will be that for which the:

Accepted Answer

The most-preferred political outcome for a voter occurs when the marginal benefit of a pure public good is equal to the voter's tax share per unit. This reflects the point at which the voter's valuation of the additional unit of the public good matches the cost they bear for it, aligning individual incentive with public expenditure.

Question 4

A voter may choose not to vote in an election between two alternatives because:

Accepted Answer

A voter may choose not to vote if they are indifferent between the options, believe their vote won't influence the outcome, or if neither option aligns closely with their preferences.

Question 5

The demand curve for a pure public good is:

Accepted Answer

Unlike private goods, the demand for pure public goods like national defense, public parks, etc. doesn't derive from individual consumers, but instead represents the total willingness of all consumers to pay for the good. Therefore, the demand for public goods is obtained by summing the marginal benefits of each consumer for each possible quantity. The demand curve for public goods is downward sloping as the marginal benefit decreases as more people consume the good.

Question 6

Which of the following collective choice rules is likely to have the lowest political externalities

Accepted Answer

Unanimous consent requires agreement from all parties, minimizing political externalities as it ensures that no one is left dissatisfied with the decision.

Question 7

The plurality rule is:

Accepted Answer

The answer of The plurality rule is:
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Question 8

Voter A will normally vote in favor of one security guard per week because his marginal benefit is $125 and his tax share is $100 per week. Voter A receives zero marginal benefit from one concert a week and would vote against it. Voter B receives $125 marginal benefit from one concert per week but no marginal benefit from one security guard. One concert per week also will fail to gain a majority when put to the vote. Assuming that both Voter A and Voter B will pay $100 per week in tax for each concert and each security guard,

Accepted Answer

The answer of Voter A will normally vote in favor...

Question 9

If bureaucrats seek to maximize the size of their budgets, they will:

Accepted Answer

Bureaucrats aiming to maximize their budgets would fund services where Total Social Benefits (TSB) exceed Total Social Costs (TSC) and where Marginal Social Costs (MSC) exceed Marginal Social Benefits (MSB), as this would justify larger budgets.

Question 10

A public choice is:

Accepted Answer

A public choice is made through the political interaction of many people according to established rules. It involves collective decision-making and is subject to the influence of various factors such as interest groups, political parties, and public opinion. Majority rule and unanimous consent are possible methods of decision-making within the established rules, but they are not the defining factors of a public choice.

Question 11

A proposal to build new roads in a small town is up for a vote. Voter B estimates that his marginal benefit of roads at the proposed new level would be $80 per year. This voter will vote against the proposal:

Accepted Answer

Voter B will vote against the proposal if the cost to him (his tax share) exceeds the benefit he perceives from the roads ($80 per year). If his tax share is more than $80, the cost outweighs the benefit, leading him to vote against the proposal.

Question 12

Currently eight security guards patrol a condominium community each week. The number of guards has been determined by majority rule. Each voter pays a tax share of $50 per guard. If Voter M is the median voter,

Accepted Answer

The median voter theorem suggests that the outcome of majority voting will reflect the preferences of the median voter. In this case, since the number of security guards has been determined by majority rule, and each voter pays a tax share of $50 per guard, the marginal benefit of the security service to Voter M (the median voter) is equal to the cost he is paying, which is $50. This is because the median voter's preference is exactly met by the current number of security guards.

Question 13

If all voters have single-peaked preferences for a pure public good, then the political equilibrium under majority rule:

Accepted Answer

The answer of If all voters have single-peaked preferences for...

Question 14

Suppose tax shares are evenly distributed for a particular service at the amount of $100.00 per person. Which taxpayer suffers a political externality based on the taxpayer's marginal benefit for the service

Accepted Answer

Taxpayers B and C suffer a political externality because their marginal benefits for the service are greater than the tax share they pay.

Question 15

Implicit logrolling results when:

Accepted Answer

Implicit logrolling occurs when two voters agree to vote for each other's preferred policies, which can pass together but would fail individually. This is the case in option B. Option A is incorrect because the mere pairing of issues on a ballot does not necessarily result in logrolling. Option C describes explicit logrolling (vote trading), not implicit logrolling. Option D is vague and does not provide enough information to determine if logrolling has occurred.

Question 16

Arrow's impossibility theorem states:

Accepted Answer

Arrow's impossibility theorem states that no rank-order voting system can convert individual preferences into a community-wide ranking while also meeting a specified set of criteria, including majority rule, when there are three or more options.

Question 17

If the marginal social benefit of one more unit of a good is 10 and the marginal social cost of one more unit of a good is 11, then:

Accepted Answer

The answer of If the marginal social benefit of one...

Question 18

If a person has multiple-peaked preferences for a pure public good,

Accepted Answer

A person with multiple-peaked preferences may initially become worse off when moving away from their most-preferred outcome, but could become better off again as they move further away, due to the nature of their preference peaks.

Question 19

If all voters have single-peaked preferences, then under majority rule:

Accepted Answer

When voters have single-peaked preferences, a political equilibrium exists, and the median voter's most-preferred outcome will be the equilibrium under majority rule.

Quiz 5: Public Choices and the Political Process