Question 1

The federal government's role as the provider of national defense is justified by considerations of

Accepted Answer

A)   Inequity.
B)   Public goods.
C)   Private goods.
D)   None of the choices are correct.

Question 2

Explain why government-funded college education can be considered a role of the government.

Accepted Answer

An externality is a cost or benefit of a...

Question 3

An externality affecting supply can be measured graphically as the

Accepted Answer

A)   Horizontal distance between the market demand curve and the social demand curve.
B)   Vertical distance between the market demand curve and the social demand curve.
C)   Horizontal distance between the market supply curve and the social supply curve.
D)   Vertical distance between the market supply curve and the social supply curve.

Question 4

The difference between public goods and private goods rests on technical considerations of exclusion of use and not political philosophy.

Accepted Answer

A) True 
 B)False

Question 5

When voting mechanisms substitute for the market mechanism in allocating resources, we are relying on

Accepted Answer

A)   Cost-benefit analysis.
B)   Opportunity cost analysis.
C)   Public choice theory.
D)   Ballot box economics.

Question 6

Monopolies will tend to overproduce goods and charge a higher price than the competitive price.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following explains what would happen if public goods were marketed like private goods?

Accepted Answer

A)   Public goods would be underproduced.
B)   Many consumers would want to buy the goods.
C)   Public goods would be overproduced.
D)   Government failure would result.

Question 8

Most of the direct spending at the state government level is on

Accepted Answer

A)   Defense.
B)   Public safety.
C)   Transportation.
D)   Education.

Question 9

Market power may result from

Accepted Answer

A)   Antitrust policy.
B)   Control of resources.
C)   Flawed price signals.
D)   Merit goods.

Question 10

Transfer payments are payments to individuals for which nothing is currently rendered in return.

Accepted Answer

A) True 
 B)False

Question 11

If public goods were marketed like private goods, then

Accepted Answer

A)   Public goods would be overproduced.
B)   There would be market failure.
C)   The optimal mix of output would occur at the market equilibrium.
D)   The economy would be outside the production possibilities curve.

Question 12

A tax that is placed on the quantity of the item purchased, such as gallons of it, is called a(n)

Accepted Answer

A)   Income tax.
B)   Property tax.
C)   Excise tax.
D)   None of the choices are correct.

Question 13

Does a state sales tax function as a progressive, regressive, or proportional source of revenue, and why?

Accepted Answer

A regressive tax system is one in which ...

Question 14

A private good

Accepted Answer

A)   Is consumed by one person and excludes consumption by others.
B)   Experiences free riders.
C)   Results in market failure when provided in markets characterized by laissez faire.
D)   Is provided most efficiently by the government.

Question 15

Which of the following is an example of a public good?

Accepted Answer

A)   Carpooling with your friends.
B)   Flood control.
C)   Social Security payments.
D)   None of the choices are correct.

Question 16

The optimal mix of output is always the same as the

Accepted Answer

A)   Output that consumers demand.
B)   Most desired combination on a production possibilities curve.
C)   Output that the government provides.
D)   Output that producers produce.

Question 17

Why is it safe to assume that national defense will always be provided by the government instead of the market?

Accepted Answer

National defense is a public good, which...

Question 18

From 1990 to 2010, the public sector share of total output

Accepted Answer

A)   Trended upward to 2000 and then downward to 2010.
B)   Trended upward through 2010.
C)   Trended downward to 2000 and then upward to 2010.
D)   Trended downward to2010.

Question 19

A monopoly occurs when

Accepted Answer

A)   A firm gains some level of market power.
B)   A firm charges a price greater than the equilibrium price.
C)   There is only one producer of a particular good or service.
D)   There is an underproduction of a good or service by a firm.

Question 20

Using Figure 4.2, suppose point C represents the optimal mix of public and private goods for a society. The market mechanism is likely to result in a mix of output represented by point

Accepted Answer

A)   F because the market mechanism is inefficient.
B)   B because the market mechanism tends to overproduce public goods.
C)   C because the market mechanism is efficient.
D)   D because the market mechanism tends to underproduce public goods.

Exam 4: The Role of Government

The optimal mix of output is always the same as the

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Using Figure 4.2, suppose point C represents the optimal mix of public and private goods for a society. The market mechanism is likely to result in a mix of output represented by point

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A monopoly occurs when

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A private good

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Market power may result from

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Monopolies will tend to overproduce goods and charge a higher price than the competitive price.

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Which of the following is an example of a public good?

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Does a state sales tax function as a progressive, regressive, or proportional source of revenue, and why?

Correct AnswerverifiedA regressive tax system is one in which ...View AnswerShow Answer

A tax that is placed on the quantity of the item purchased, such as gallons of it, is called a(n)

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The difference between public goods and private goods rests on technical considerations of exclusion of use and not political philosophy.

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When voting mechanisms substitute for the market mechanism in allocating resources, we are relying on

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From 1990 to 2010, the public sector share of total output

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The federal government's role as the provider of national defense is justified by considerations of

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Explain why government-funded college education can be considered a role of the government.

Correct AnswerverifiedAn externality is a cost or benefit of a...View AnswerShow Answer

An externality affecting supply can be measured graphically as the

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If public goods were marketed like private goods, then

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Most of the direct spending at the state government level is on

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Transfer payments are payments to individuals for which nothing is currently rendered in return.

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Which of the following explains what would happen if public goods were marketed like private goods?

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Why is it safe to assume that national defense will always be provided by the government instead of the market?

Correct AnswerverifiedNational defense is a public good, which...View AnswerShow Answer

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A regressive tax system is one in which ...
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An externality is a cost or benefit of a...
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National defense is a public good, which...
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