Question 1

The proposed takeover of Tony's Airlines by Plummet Airlines will result in increased profits for Plummet and increased airfares for consumers.This is an example of the _____

Accepted Answer

The concentrated distribution of benefits is evident in the increased profits for Plummet Airlines, while the widespread distribution of costs is reflected in the increased airfares for consumers.

Question 2

An example of competing-interest legislation is _____

Accepted Answer

The quota that limits the import of steel to the United States is an example of competing interest legislation because it serves to protect domestic steel producers, but may lead to higher prices for consumers, and makes it difficult for foreign steel producers to compete in the U.S. market.

Question 3

Legislation that involves concentrated benefits but widespread costs is called _____

Accepted Answer

Special-interest legislation benefits a small group or industry but imposes costs on a larger group or society as a whole. This type of legislation is often pushed by interest groups seeking to secure benefits for their members at the expense of the general public. Examples include subsidies for agriculture, tariffs that protect domestic industries from foreign competition, and tax breaks for specific industries or companies.

Question 4

In order to dispose of the nuclear waste created by power plants around the country,the government buys land in Glowing Gulch,Idaho.The residents of that town organize to block the construction of the nuclear waste facility.Which of the following statements is false?

Accepted Answer

This statement is false because not all citizens are equally concerned about all public issues. In this case, the citizens of Glowing Gulch are specifically concerned about the construction of the nuclear waste facility in their town. They are not just a generic "special-interest group," but rather a group of individuals with valid concerns about the potential risks and negative impacts of the facility on their town and their quality of life.

Question 5

Exhibit 16.2
 
-Refer to Exhibit 16.2.Box 1 shows _____

Accepted Answer

Box 1 shows traditional public-goods legislation, as it refers to laws and regulations that benefit the broader public interest rather than specific private interests or groups.

Question 6

Competing-interest legislation involves _____

Accepted Answer

Competing-interest legislation typically involves both concentrated costs and concentrated benefits, where specific groups are directly affected in terms of both the costs they incur and the benefits they receive, often leading to lobbying and advocacy efforts by these groups.

Question 7

When the government increases taxes to provide traditional public goods,such as national security,there tend to be:

Accepted Answer

When the government increases taxes to provide traditional public goods like national security, the benefits are widespread because everyone in the society benefits from these goods. The costs are also widespread because the tax increase affects all taxpayers.

Question 8

Competing-interest legislation is characterized by _____

Accepted Answer

The answer of Competing-interest legislation is characterized by _____
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Question 9

Special-interest legislation that imposes costs over many taxpayers can be enacted because _____

Accepted Answer

Taxpayers often remain rationally ignorant of special-interest legislation, meaning they do not invest the time and effort to become informed about legislation that may ultimately affect them. This allows small, well-organized interest groups to lobby government officials and secure the passage of legislation that imposes costs on a large number of taxpayers but provides substantial benefits to the lobbying group.

Question 10

Exhibit 16.2
 
-Refer to Exhibit 16.2.In Box 1,an example of traditional public-goods legislation is that for _____

Accepted Answer

National defense is an example of traditional public-goods legislation, as it is a good that is non-excludable and non-rivalrous, meaning that it is difficult to exclude anyone from its benefits and one person's use of it does not detract from another's use. This creates a free-rider problem, where people may be inclined to benefit from national defense without contributing to its provision. Therefore, government intervention is necessary to provide and fund national defense, making it a traditional public good. The other options listed do not fit the characteristics of a traditional public good.

Question 11

Legislation that provides a price support for dairy farmers is an example of _____

Accepted Answer

Price support legislation for dairy farmers benefits a specific industry or group, rather than the general public, making it an example of special-interest legislation.

Question 12

A large U.S.steel firm wants to restrict imports of Japanese steel,but Ford Motor Company wants fewer restrictions on steel imports so that its cost of production remains constant.This can best be described as a(n)_____

Accepted Answer

This is an example of a competing interest, where the interests of two parties are in conflict with each other. The steel firm wants to restrict imports to protect their industry, while Ford Motor Company wants fewer restrictions to keep their costs low. They have different goals and preferences, and achieving one will come at the expense of the other.

Question 13

Price support for corn involves _____

Accepted Answer

Price support for corn typically involves concentrated benefits for corn producers who receive higher prices for their products, but widespread costs for consumers and taxpayers who pay higher prices for corn and corn-related products or subsidize the supports through taxes.

Question 14

JPC Motors benefits from tariffs on imported automobiles.Companies that use imported automobile parts want to get them cheaply.In this case,the issue of tariff legislation involves _____

Accepted Answer

The issue of tariff legislation involves competing interests because it promises concentrated costs and benefits. The costs of tariffs are concentrated on consumers and producers who use imported goods, while the benefits are concentrated on domestic producers who compete with imported goods.

Question 15

Special-interest legislation is characterized by _____

Accepted Answer

Special-interest legislation often benefits a small group or industry, leading to concentrated benefits for those affected. However, the costs of the legislation are often spread widely across the population, resulting in widespread costs. This can create a situation where the concentrated benefits motivate the special interest group to lobby for the legislation, even if the overall costs are much higher than the benefits.

Question 16

Competing-interest legislation _____

Accepted Answer

Competing-interest legislation typically benefits or harms only a specific group of individuals or industry. Therefore, it imposes both benefits and costs on relatively few individuals or groups.

Question 17

Environmentalists,worried about sulfur dioxide in the air,pressure the government to make it mandatory for bus manufacturers to modify the exhaust systems in buses.In this situation,_____

Accepted Answer

The benefits of reducing sulfur dioxide in the air are widespread, affecting the general public by improving air quality and public health, while the costs of modifying bus exhaust systems are concentrated on bus manufacturers and possibly public transportation authorities.

Question 18

Special-interest groups,such as the pharmaceutical lobby,often get what they demand because _____

Accepted Answer

Voters are often rationally ignorant because the cost of fully informing themselves about all issues and policies is high compared to the impact their individual vote has. Special-interest groups, like the pharmaceutical lobby, can exploit this by influencing politicians through lobbying efforts, knowing that the general public is unlikely to be fully informed or mobilized against their specific interests.

Question 19

If general tax revenues were used to subsidize the production of toothpicks,the government's actions would have _____

Accepted Answer

Subsidizing the production of toothpicks with general tax revenues would mean that the costs (in the form of taxes) are spread across the entire tax-paying population, while the benefits (such as lower prices or higher profits for toothpick producers) would be concentrated among a much smaller group, namely the producers and possibly consumers of toothpicks.

Question 20

Legislation that provides a subsidy to tobacco growers is an example of _____

Accepted Answer

Special-interest legislation provides benefits to a specific group, often at the expense of others. Subsidies to tobacco growers benefit a specific industry, making it an example of special-interest legislation.

Quiz 16: Public Goods and Public Choice