Question 1

One result of the public choice model is that most economists believe that
A)when market failure occurs,government intervention will always lead to a more efficient outcome.
B)government intervention will always result in a reduction in economic efficiency in regulated markets.
C)policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency.
D)the voting paradox will prevent voters from selecting the best person for public office.

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, which means that government intervention may not always lead to a more efficient outcome. This is because policymakers may be influenced by special interest groups or may have personal motives that differ from the public interest. Therefore, choice C is the correct answer. Choices A, B, and D are not accurate because they suggest that government intervention always leads to a certain outcome, which is not necessarily true according to the public choice model.

Question 2

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?
A)Everyone who votes must agree with a decision made collectively through government,but in markets individuals can make their own choices.
B)Individuals are less likely to see their preferences represented in the outcomes of government policies than in the outcomes of markets.
C)The cost of a government policy is determined by a majority vote of members of the public;decisions made in markets are based on individual willingness to pay.
D)Choices made through government policies are more important than decisions individuals make through markets.

Accepted Answer

The answer of The public choice model can be used...

Question 3

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?
A)rational ignorance
B)party loyalty
C)logrolling
D)the voting paradox

Accepted Answer

Congressman Flack's vote for a program that benefits Congressman Walpole's constituents is best explained by logrolling, which is a common practice in Congress where members vote for each other's bills or programs in exchange for support for their own legislation.

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 only holds true when voters have preferences that are single-peaked and symmetric around the median voter. When preferences are very different from those of the median voter, the theorem may not accurately predict election outcomes.

Question 5

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
A)rent seeking.
B)logrolling.
C)government failure.
D)the public choice initiative.

Accepted Answer

Rent seeking occurs when individuals or firms use the political process to gain an advantage, such as subsidies or regulations that benefit them at the expense of others. This behavior is widespread, and economists study it to understand how it affects market outcomes and the overall efficiency of the economy. Logrolling is a related phenomenon in which politicians trade favors to build support for their policies, but it is not necessarily rent seeking. Government failure refers to the problems that can arise when government intervention in the economy produces unintended or negative consequences, and the public choice initiative is a broad movement to apply economic insights to the study of politics and public policy.

Question 6

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 argues that policymakers are likely to prioritize their own self-interest rather than the preferences of voters, even if those preferences are clear.

Question 7

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 suggests that, in a two-candidate election, candidates will tend to move toward the position of the median voter to maximize their chances of winning. This means that the outcome of the majority vote is likely to reflect the preferences of the median voter, who is in the political middle.

Question 8

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 voters who are informed about pending legislation would have an economic incentive to vote for or against rent-seeking legislation. However, even if voters lack an economic incentive, they can still hold preferences and values that shape their views on legislation. These preferences may not always align with rent-seeking, but they can still impact the decisions of legislators.

Question 9

Which of the following statements refers to rent seeking?
A)"Laws passed by the federal government often provide benefits for a small number of individuals.These individuals,in turn,have an incentive to contribute to the campaigns of politicians who pass these laws."
B)"The federal government should spend more money on programs that help low income citizens and less money on national defense."
C)"The role of the federal government in the U.S.economy grew significantly after the Great Depression.Government spending and taxes are a much greater proportion of total income today than they were in 1929."
D)"There is an opportunity cost whenever the federal government spends tax revenue.For example,an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program."

Accepted Answer

Rent seeking refers to the practice of seeking to increase one's own wealth or income without creating new wealth or income. In this statement, the small number of individuals benefit from laws passed by the federal government and contribute to campaigns of politicians who pass these laws, suggesting a rent seeking behavior.

Question 10

Which of the following is a consequence of the voting paradox?
A)A majority of voters elect a candidate that does not represent the preferences of the voter who is in the political middle.
B)Politicians support small groups of individuals and firms that benefit from special interest legislation,rather than a much larger group of voters who pay the cost for this legislation.
C)Individuals and firms who benefit from government actions engage in rent seeking.
D)The collective preferences of voters are not transitive and voting outcomes are inconsistent.

Accepted Answer

The voting paradox results in non-transitive collective preferences, which means that the outcome of the vote can be inconsistent and not represent the true preferences of the voters. This can lead to confusion and frustration for voters, as well as potential for manipulation by politicians or special interest groups.

Question 11

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 self-interests, even if it conflicts with the public interest.

Question 12

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

In the political market, some individuals can receive benefits through government policies and programs without having to pay for them through taxes. This is known as rent seeking or crony capitalism, where certain groups or individuals use their power or influence to gain advantages over others. The market process, on the other hand, relies on voluntary exchange and competition, and individuals can only receive benefits by providing goods or services that others value.

Question 13

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?
A)the voting paradox
B)logrolling
C)rational ignorance
D)regulatory capture

Accepted Answer

Rational ignorance refers to the idea that voters have limited incentive to acquire knowledge on political issues or candidates because their individual vote has little impact on the outcome of an election. Therefore, they choose to remain ignorant rather than investing time and effort into gaining knowledge that may not benefit them in any significant way.

Question 14

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
A)examples of rent seeking.
B)illegal.
C)the result of the voting paradox.
D)irrational because elected officials will almost always act in the interest of the voters who have to pay the cost of the legislation.

Accepted Answer

Financial contributions to elected officials by firms seeking special interest legislation is an example of rent-seeking. This is because these firms are essentially trying to buy political influence to benefit themselves at the expense of the general public. This behavior can lead to inefficient outcomes and favoritism towards the interests of the contributing firms rather than those of the broader population.

Question 15

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?
A)Congressman Flack did not have time to read and understand all of the legislation he voted on.Members of Congress often depend on their staffs to read proposed legislation and recommend how they should vote.
B)Legislators such as Congressman Flack are similar to other decision-makers in that they sometimes make irrational choices.
C)Congressman Flack will support programs of legislators from his own party,regardless of who benefits from these programs.
D)Congressman Flack expects Congressman Walpole's support for programs that will benefit Flack's constituents.

Accepted Answer

The public choice model suggests that politicians act in their self-interest, which includes getting support for their own legislation. Congressman Flack's vote for a program that benefits Congressman Walpole's constituents can be explained as an expectation of reciprocation, where Congressman Walpole will support programs that benefit Flack's constituents in the future.

Question 16

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?
A)regulatory capture
B)logrolling
C)special-interest regulation
D)the regulatory paradox

Accepted Answer

Regulatory capture refers to the phenomenon in which regulatory agencies become heavily influenced by the very industries they are tasked with regulating, often to the detriment of the public interest. This can occur through a variety of means, such as industry lobbying, revolving-door employment, or other forms of influence. As a result, regulatory capture can lead to a situation in which the regulated industry is effectively "capturing" the regulatory agency meant to oversee it, leading to ineffective or harmful regulations.

Question 17

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?
A)the voting paradox
B)the median voter theorem
C)rent seeking
D)transitivity of voters' preferences

Accepted Answer

The answer of Which of the following is used to...

Question 18

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals
A)are examples of fraud;but these individuals usually avoid prosecution because of logrolling and rational ignorance.
B)are examples of rent seeking.
C)offer proof that Adam Smith's "invisible hand" is not valid.
D)are evidence of the voting paradox.

Accepted Answer

The actions described in the statement are examples of rent seeking, which is the pursuit of economic gain by individuals or groups through the use of government action, such as lobbying for subsidies or regulations that benefit their own interests at the expense of others. This behavior is sometimes referred to as "special interest politics" and can distort the allocation of resources in the economy.

Question 19

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?
A)Congress should abolish the Food and Drug Administration,the Environmental Protection Agency,and other agencies and commissions because the costs of their actions exceed the benefits they provide to the public.
B)Government should do more to regulate markets.The public choice model has shown that rent seeking and rational ignorance affect more markets than are currently subject to regulation.
C)U.S.citizens can afford more government regulation if the cost of this regulation is borne mostly by taxpayers with the highest incomes.
D)Agencies such as the Food and Drug Administration and the Environmental Protection Agency can serve a useful purpose,but we need to take the costs of regulation into account along with the benefits.

Accepted Answer

Most economists believe that government regulation can serve a useful purpose in certain situations, but it is important to consider both the benefits and the costs of regulation. This aligns with the statement in option D. Option A is too extreme and ignores any potential benefits of specific government agencies. Option B is also a bit extreme and assumes that all markets need more regulation. Option C suggests an unfair distribution of costs and is not a widely accepted view among economists.

Question 20

Which of the following is an example of rent seeking behavior?
A)Apple earned large profits from the development and sale of the iPhone.
B)Amazon introduced the Kindle to compete with Sony's Digital Reader.Amazon was motivated by the desire to earn profits from the Kindle but also increased the choice of digital music players available to consumers.
C)U.S.sugar firms convinced Congress to impose a quota on imports of sugar.
D)Recent increases in cigarette taxes faced little opposition from voters,many of whom were rationally ignorant with respect to the tax.

Accepted Answer

Rent seeking behavior refers to efforts by individuals or firms to obtain income or wealth by manipulating the political or legal environment rather than by creating new wealth. In this case, U.S. sugar firms convinced Congress to impose a quota on imports of sugar, which limits competition and allows them to charge higher prices for sugar, leading to increased profits without creating new wealth.

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

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

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?

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.

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

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.

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.

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.

Which of the following statements refers to rent seeking?

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

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.

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.

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?

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

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?

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?

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?

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

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?

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