Question 1

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 2

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 3

Which of the following statements refers to rent seeking?

Accepted Answer

Rent seeking refers to individuals or groups seeking to benefit themselves through political and economic means, often at the expense of others. In this case, the small group of individuals benefiting from laws passed by the federal government are likely engaging in rent seeking behavior by contributing to the campaigns of politicians who pass these laws.

Question 4

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 majority of voters have preferences that are closer to the median voter's preferences. When there is a significant divergence between the preferences of the majority of voters and the median voter, the theorem may not accurately predict election outcomes.

Question 5

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 situation when the regulated firms or industries exert disproportionate influence over the regulatory agency, leading to the agency acting in favor of the regulated firms rather than in the public's interest. This may happen due to the revolving door phenomenon, where regulators move to the industry they regulate or vice versa, creating a conflict of interest.

Question 6

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

According to the public choice model, politicians make decisions in order to maximize their own benefits, which may include gaining support from other legislators. Congressman Flack's vote for a program that will benefit Congressman Walpole's constituents suggests that Flack expects support from Walpole in return for future programs that may benefit Flack's constituents.

Question 7

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 involves individuals seeking to use government action (such as regulation, subsidies, or tax breaks) to make themselves better off at the expense of others. Rent seeking is a form of economic inefficiency and often results in resources being misallocated.

Question 8

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 those interests conflict with the public interest.

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 not logically correct. Even if voters lack an economic incentive, it does not necessarily mean that lawmakers will not be influenced by interest groups or political ideology to pass rent-seeking legislation. In fact, lawmakers may have other incentives to support such legislation, such as gaining political power or securing donations from special interest groups. Therefore, the preferences of voters may not always serve as a constraint on lawmakers.

Question 10

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 where voters choose not to become informed about political issues and candidates because the perceived cost of gathering information outweighs the expected benefit of using that information to make a better choice at the ballot box.

Question 11

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 for a program that will benefit the constituents of Congressman Walpole suggests that they engaged in logrolling – a common practice in politics where legislators vote for each other's bills in exchange for support for their own bills.

Question 12

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 promoting social welfare, but that the costs of regulation need to be carefully considered along with the benefits. This view is reflected in option D, which suggests that agencies like the FDA and EPA can be beneficial, but that their costs need to be taken into account. Option A is too extreme and dismisses the benefits provided by these agencies, while option B oversimplifies the issue and suggests that more regulation is needed without considering the costs. Option C is also problematic because it suggests that high-income taxpayers should bear the burden of regulation, rather than spreading costs more broadly across society.

Question 13

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 is likely to represent the preferences of the voter who is in the political middle, making option A true.

Question 14

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 self-interest, which may lead them to prioritize certain issues or take actions that do not align with the preferences of voters, even when those preferences are clear.

Question 15

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

Accepted Answer

Rent seeking is the pursuit of economic gain through lobbying for government regulations or special treatment rather than through productivity gains. In this case, U.S. sugar firms convinced Congress to impose a quota on imports of sugar, restricting competition and allowing the firms to earn economic profits at the expense of consumers.

Question 16

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 is because politicians can direct government spending to specific groups or industries, providing direct benefits without necessarily increasing taxes on those individuals or groups. This can lead to a distribution of benefits that is not based on market efficiency or merit.

Question 17

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 by firms seeking special interest legislation can be seen as an example of rent seeking, where businesses or individuals use their resources to try to obtain preferential treatment from the government. This can lead to policies that benefit certain groups at the expense of others and may not be in the overall best interest of society.

Question 18

One result of the public choice model is that most economists believe that

Accepted Answer

The public choice model suggests that policymakers may have political incentives that conflict with economic efficiency, leading them to intervene in ways that do not promote the most efficient outcome. Therefore, option C is the correct choice. Options A, B, and D are all incorrect since they make statements that are not universally true according to the public choice model.

Question 19

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 individuals or firms attempting to use government policies or regulations to increase their own wealth or status at the expense of others. This can include seeking subsidies, tax breaks, or other forms of government intervention that benefit them but harm others in the market.

Question 20

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

Accepted Answer

The voting paradox is a situation in which the collective preferences of voters are not transitive and voting outcomes are inconsistent. This means that depending on the specific preferences of voters and the choices presented, different outcomes can arise, making it difficult to determine the true preferences of the electorate. As a consequence, it can be challenging for politicians to accurately represent the preferences of all voters and can result in the election of candidates that do not reflect the preferences of a majority of voters.

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