Question 1

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 policymakers have their own self-interests, such as getting re-elected, and may prioritize these interests over economic efficiency. Therefore, it is important to consider these incentives when analyzing government intervention in the economy. Choices A, B, and D are not accurate statements for most economists' beliefs on government intervention and the public choice model.

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 is a widely accepted theory in political science, stating that in a two-candidate election where voters have a single-dimensional preference for a policy, the candidate who holds the policy position that is closest to the median voter's position is most likely to win. This is because the median voter represents the voter who is politically in the middle and thus has the greatest number of voters on either side of them. This candidate is also likely to be the one who best represents the preferences of the majority of voters.

Question 3

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 used to describe the phenomenon of voters choosing not to become well-informed about political issues or candidates because the perceived cost of gathering this information (time, effort, resources) outweighs the expected benefits of voting. This results in voters making choices based on limited or biased information, which can lead to suboptimal outcomes for society as a whole.

Question 4

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 is based on the assumption that policymakers are self-interested and may act in a way that is not aligned with the preferences of voters due to various constraints and incentives. Therefore, the answer is true.

Question 5

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 campaigns by firms seeking special interest legislation is an example of rent-seeking behavior. Rent-seeking involves using resources to obtain economic benefits through political means rather than through creating new wealth or increasing productivity. In this case, the firms are seeking to influence elected officials to pass laws that will benefit them financially, rather than benefiting society as a whole.

Question 6

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 when a regulatory agency, which is supposed to act in the public interest, becomes dominated by the industry it is supposed to regulate. The industry uses its power and resources to influence the agency's decision-making processes to benefit its own interests rather than the public interest. This can result in the agency acting against its mission and the public good.

Question 7

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 agree that government regulations can be useful in correcting market failures and protecting public health and safety. However, it is important to consider the costs of regulation and weigh them against the benefits. Agencies such as the FDA and EPA can serve a valuable purpose, but there may be instances where the costs of their actions outweigh the benefits they provide. Therefore, government regulation must be carefully crafted and monitored to ensure that it does more good than harm.

Question 8

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

Accepted Answer

Rent seeking is when a company or individual seeks to gain wealth through government intervention or manipulation, rather than creating new wealth through innovation or investments. In this case, the U.S. sugar firms convinced Congress to impose a quota on imports of sugar, which gave them an advantage over foreign competitors and increased their profits through government intervention rather than innovation or investments. This is a classic example of rent seeking behavior. A, B, and D are not examples of rent seeking behavior.

Question 9

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 are motivated by the desire to get reelected. Therefore, Congressman Flack's vote for a program that benefits Congressman Walpole's constituents can be seen as a strategic move to gain support for future programs that benefit Flack's own constituents.

Question 10

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 11

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

This statement is true. Individuals can receive large benefits from political processes, such as government contracts or subsidies, without paying significantly higher taxes in return. This can lead to unequal distribution of benefits and create issues of lobbying and crony capitalism.

Question 12

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's vote is best explained by logrolling, which is the practice of exchanging votes or supporting each other's legislative proposals among members of Congress in order to secure passage of their own proposals.

Question 13

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

Accepted Answer

The voting paradox results in voting outcomes that are inconsistent and the collective preferences of voters are not transitive. This means that the outcome of the election may be different depending on the order in which the preferences of voters are considered, leading to a paradoxical situation where there is no clear winner. This can undermine the legitimacy of the democratic process and make it difficult to implement policies that reflect the preferences of the majority of voters.

Question 14

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 in the question are examples of rent seeking, which is the use of government power to obtain special privileges or benefits at the expense of others. This behavior can lead to inefficiencies and reduced economic growth.

Question 15

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

The statement implies that if voters had an economic incentive to become informed about legislation, they would be more likely to vote for legislators who support their economic interests. However, if voters do not have this incentive, they may be more inclined to support rent-seeking legislation that benefits special interest groups rather than the general public. Therefore, voter preferences could actually encourage legislators to pass rent-seeking legislation.

Question 16

Which of the following statements refers to rent seeking?

Accepted Answer

Rent seeking refers to attempts by individuals or firms to use the political system to obtain economic benefits beyond what they would earn in a competitive market. This statement describes how businesses may contribute to political campaigns in order to influence the passing of laws that benefit them economically.

Question 17

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 and firms to use the government to gain economic privileges, such as subsidies or regulatory protection, at the expense of others. This behavior is often analyzed by economists as a form of economic inefficiency and can result in a misallocation of resources.

Question 18

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 19

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 20

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 median voter's preferences are reflective of the majority of voters. If the majority of voters have preferences that are very different from the median voter's preferences, then the theorem may not accurately predict election outcomes.

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