Question 1

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

Accepted Answer

Unanimous consent is the collective choice rule in which all members must agree for a decision to be made. This minimizes political externalities as it ensures that all members have equal say and all concerns are addressed before a decision is made. Other rules such as simple majority or plurality may lead to the exclusion or marginalization of minority opinions and can generate greater political externalities.

Question 2

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

A political externality occurs when the cost or benefit of a policy is not evenly distributed among all taxpayers. In this case, if tax shares are evenly distributed at $100.00 per person, then taxpayer A's marginal benefit matches the cost they are paying for the service. However, taxpayer B's marginal benefit is greater than their cost of $100.00, and taxpayer C's marginal benefit is less than their cost of $100.00. Therefore, both taxpayer B and C are experiencing political externalities.

Question 3

The plurality rule is a:

Accepted Answer

The answer of The plurality rule is a:
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Question 4

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

Accepted Answer

Bureaucrats aiming to maximize their budgets are likely to fund services where the Total Social Benefit (TSB) is greater than Total Social Cost (TSC) and where the Marginal Social Cost (MSC) is greater than the Marginal Social Benefit (MSB), as both scenarios suggest an expansion of budget and services beyond efficient equilibrium.

Question 5

A public choice is:

Accepted Answer

A public choice is a decision made through political interaction of many people according to established rules.

Question 6

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 7

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

Accepted Answer

The median voter theorem states that if voters have single-peaked preferences, the outcome of majority rule voting will reflect the preference of the median voter.

Question 8

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 9

The demand curve for a pure public good is:

Accepted Answer

Since a pure public good is non-excludable and non-rivalrous, the marginal benefit that each individual derives from consuming the good is the same as the marginal benefit that society receives as a whole. Therefore, the demand curve for a public good is obtained by summing up the marginal benefits of each consumer for each possible quantity, resulting in a downward-sloping curve.

Question 10

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 11

Arrow's impossibility theorem states that a:

Accepted Answer

Arrow's impossibility theorem shows that there cannot be a unique and fair way to aggregate individual preferences into a social choice when there are three or more alternatives in a voting system using majority rule. Therefore, option B is correct as a unique political equilibrium cannot exist under majority rule.

Question 12

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

Accepted Answer

Unanimous consent requires that every member of the group agrees on a decision, which can be difficult and time-consuming to achieve. As a result, it is likely to require the highest political transaction costs, compared to other rules that only require a majority or plurality vote.

Question 13

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

Accepted Answer

Multiple-peaked preferences mean that a person may have several different levels of a public good that they prefer, not just a single most-preferred amount. As such, moving away from their most-preferred outcome might initially make them worse off, but if they move towards another peak preference, they could become better off again. This reflects the non-monotonic nature of their utility with respect to the quantity of the public good, contrasting with the assumption that marginal benefits always decline (as suggested in option C).

Question 14

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

Accepted Answer

All three options are valid reasons for a voter to choose not to vote. If a voter is indifferent between the two alternatives, they may not see the point in voting. If a voter believes that their vote carries no weight in the outcome of the election, they may also choose not to vote. Finally, if a voter does not agree with either of the options on the ballot, they may opt not to vote out of principle.

Question 15

Implicit logrolling results when:

Accepted Answer

Implicit logrolling occurs when two voters agree to support each other's favored issues in exchange for mutual gain. Therefore, option B where two voters successfully pair two issues on a ballot to pass together but would fail individually is the correct answer as it accurately describes the situation of implicit logrolling. Options A, C, and D do not necessarily involve the exchange of support between voters which is essential for logrolling.

Question 16

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

If the marginal social cost exceeds the marginal social benefit, producing more of the good is inefficient. However, if the total social benefit still exceeds the total social cost, there is room for budget increase.

Question 17

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 18

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 19

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

Accepted Answer

If all voters have single-peaked preferences, then a political equilibrium exists where the outcome is the median most-preferred option. Additionally, cycling of political outcomes can occur when there are multiple peaks in the preference distribution. Thus, both (b) and (c) are correct.

Quiz 5: Public Choice and the Political Process