The Economic Way of Thinking, 13e (Heyne)
Chapter 11 Markets and Government
1) Which of the following is a clear difference between the market system and government?
A) Collective welfare controls government policy; the market system serves the welfare of
individuals.
B) Competition regulates the market system, but competition does not constrain the actions of
government officials.
C) The market system serves the interests of some; government serves the interests of all.
D) Each of the above statements expresses the difference between the two.
E) None of the above expresses the difference between the two.
2) Assuming everyone wants to advance their interests in an effective way is an assumption of
A) capitalism.
B) economic theory.
C) government.
D) selfishness.
3) In the economic way of thinking, government consists of many different people interacting on
the basis of
A) fear.
B) legal guarantees.
C) prevailing property rights.
D) public interests.
4) Economic theory can predict or explain behavior
A) in the private but not in the public or government sector of society.
B) most successfully in areas where behavior is largely guided by foresight and planning.
C) only when behavior aims at maximizing net monetary revenue.
D) when people behave selfishly rather than in the public interest.
5) Economic theory assumes elected and appointed government officials
A) place their personal or private welfare ahead of the public interest.
B) place the public interest ahead of any personal or private interests of their own.
C) are free to pursue the public interest because they aren’t constrained by competition.
D) respond to the anticipated costs and benefits to themselves of decisions contemplated.
6) Government is a social institution
A) in which people do not engage in competition.
B) in which the public interest, rather than private interests, guide individual behavior.
C) whose behavior is determined by individuals’ perceptions of marginal costs and marginal
benefits.
D) whose detailed actions are governed by the will of the majority.
7) How does the text distinguish between government and the market?
A) The government is the place around the capital city; the market is everywhere else.
B) The government is populated with publicly-spirited people; the market is populated with
selfish people.
C) The government is based on cooperation; the market is based on competition.
D) In all of the above ways.
E) In none of the above ways.
8) How does the text distinguish between the market and government?
A) The market is based on competition; the government is based on cooperation.
B) The market is based on prices; the government is based on policies.
C) The market is based on individualism; the government is based on socialism.
D) In all of the above ways.
E) In none of the above ways.
9) In economics, the main difference between market and government stems from differences in
A) attitude.
B) prevailing property rights.
C) competition and cooperation.
D) men and women.
E) the majority and the minority.
10) The economic way of thinking assumes individuals
A) are irrational.
B) are only concerned with “number one” (i.e., themselves).
C) try to advance their own projects.
D) cannot possibly behave in the interests of others.
11) According to economic theory, a person
A) wants to advance his or her own interests and will try to do it rationally.
B) would not generate negative externalities if one has a properly-developed social conscience.
C) acts in a profit-seeking way in the market process and in a social-seeking way in government
processes.
D) necessarily behaves as an individualist in markets and as a socialist in government.
12) Economics assumes people
A) tend to compete more in markets than they do in government.
B) tend to cooperate more in markets than they do in government.
C) try to advance their own projects in market and government processes.
D) try to pursue the public interest but find over time that only private interests matter.
13) According to the economic way of thinking,
A) the private sector is more important than the public sector.
B) the public sector is more important than the private sector.
C) the public sector cannot be adequately studied using economic theory.
D) people in society strive to advance the projects they are interested in, and they will advance
their interests through market institutions or the institutions of government.
14) Economic theory assumes people will not do what is in the interest of all unless it is in the
interest of
A) each.
B) humanity.
C) the government.
D) the public.
E) their own pocketbooks.
15) The economic way of thinking assumes a politician ignores
A) the costs of her actions.
B) the benefits of her actions.
C) her own interests after taking the oath of office.
D) all of the above.
E) none of the above.
16) According to economic theory, a politician
A) expands activities whose marginal benefit exceeds marginal cost.
B) contracts activities whose marginal cost exceeds marginal benefit.
C) does not necessarily act on narrow or selfish interests.
D) does all of the above.
E) does none of the above.
17) Which statement is consistent with the economic way of thinking?
A) Politicians seek to advance their own interests.
B) Politicians are not only concerned with money and material goods.
C) Politicians do not necessarily pursue narrow or selfish goals.
D) All of the above.
E) None of the above.
18) Which statement is consistent with the economic way of thinking?
A) Individuals in the market seek to advance their own interests.
B) Individuals in the market are not only concerned with money and material goods.
C) Individuals in the market do not necessarily pursue narrow or selfish goals.
D) All of the above.
E) None of the above.
19) Fill in the blanks: People pursue ________ projects in the market and ________ projects in
government.
A) their own; their own
B) their own; others’
C) private; public
D) individualistic; socialistic
20) Politicians have often kissed babies to improve their re-election prospects. A rational
politician will kiss babies as long as
A) the public is impressed.
B) the marginal benefits exceed the marginal costs.
C) there is a camera crew to document the activity.
D) the babies are cute.
21) According to economic theory, a politician will accept an invitation for another photo
opportunity as long as
A) she is paid well.
B) he can be sure he will look handsome in the picture.
C) the marginal benefit exceeds the marginal cost.
D) there are no costs involved.
22) Complete the sentence. An entrepreneur advances a project only if the expected marginal
benefit exceeds the expected marginal cost,
A) and so does a government bureaucrat.
B) but a government bureaucrat advances a project only if the marginal cost exceeds the
marginal benefit.
C) but a government bureaucrat is in no position to determine the cost of his own action.
D) but a government bureaucrat has no concern about the benefit of his own action.
23) In the economic way of thinking, what do entrepreneur s and bureaucrats have in common?
A) They each advance projects solely in the public interest.
B) They each advance projects only if the expected marginal benefits exceed the expected
marginal costs.
C) They each advance projects only if the expected marginal benefits are less than the expected
marginal costs.
D) They each advance projects only if they impose no negative externalities.
24) How is a politician similar to an entrepreneur?
A) Each advances a project solely in the public interest.
B) Each advances a project only if the expected marginal benefits equal the expected marginal
costs.
C) Each advances a project only if the expected marginal benefits exceed the expected marginal
costs.
D) Each advances a project only if they impose no negative externalities.
25) The economic way of thinking views government as a social institution
A) in which people do not compete.
B) in which the public interest has priority over private interests.
C) whose actions are controlled by the will of the majority.
D) whose actions are determined by individuals’ perceptions of their self-interest.
26) Which of the following is not an important difference between privately-owned enterprises
and government institutions?
A) Decision makers confront different sets of incentives.
B) Different kinds of information are available to decision makers.
C) Government has the generally acknowledged right to use coercion.
D) Self-seeking motives are less characteristic of government employees.
27) Which of the following is an important difference between government and privately-owned
enterprises?
A) Government can distribute goods without employing discriminatory rationing criteria.
B) Government can more easily use negative incentives to obtain resources.
C) Government does not produce exchangeable commodities or services.
D) Government provides services at a lower opportunity cost.
E) Government tends to pay close attention to the varying preferences of the people.
28) When people say, “government officials act on the basis of the property rights which they
perceive,” they mean
A) government officials are inherently conservative.
B) government officials do not have to be concerned about information being scarce.
C) government officials make decisions based on the expected consequences to themselves.
D) government officials will ordinarily not confiscate property without due process of law.
29) What is the relationship between government and coercion?
A) Government achieves its objectives exclusively through coercion.
B) Government aims at minimizing the use of coercion in society.
C) Government is generally granted the exclusive right to coerce adults.
D) Only governments use coercion.
30) How does the textbook distinguish between coercion and persuasion? Coercion induces
cooperation by
A) making only a majority better off, persuasion by making everyone better off.
B) making nearly everyone better off, persuasion by making only a few people better off.
C) threatening to reduce people’s options, persuasion by promising to increase their options.
D) using force, persuasion by using rational argument.
31) How does the text distinguish between coercion and persuasion?
A) Coercion uses force; persuasion uses reasoning.
B) Coercion uses violence; persuasion is peaceful.
C) Coercion cannot make everyone better off, but persuasion can.
D) Coercion is evil, and persuasion is good.
E) Coercion induces cooperation by threatening to reduce options, persuasion by promising to
expand options.
32) Which organization possesses a generally conceded and exclusive right to coerce adults?
A) The capitalist enterprise
B) The modern church
C) The government
D) The family
33) In the economic way of thinking, the right to coerce adults is
A) immoral.
B) a property right.
C) the most efficient way for management to control labor.
D) necessarily antithetical to a free and open society.
E) good because it’s rooted in the Old Testament.
34) The effective use of coercion in a society ultimately depends upon
A) fear.
B) free enterprise.
C) police enforcement.
D) voluntary cooperation.
35) The text defines persuasion as inducing others to cooperate by
A) either threats or promises.
B) employing deception.
C) offering people additional options.
D) providing monetary payments.
E) using verbal arguments.
36) Which of the following is an important difference between police protection and food and
explains why one is commonly provided by government while the other is not?
A) Food can easily be withheld from people who don’t pay for it.
B) Food is not a traditional concern of government.
C) Food is too vital to be entrusted to government.
D) Food producers form a powerful political lobby.
E) Food provided through government would be inefficient.
37) Costs that are incurred when people engage in a trade
A) are a waste of resources because they do not create benefits of equal or greater value.
B) can be eliminated by substituting government regulation for voluntary exchange.
C) reduce the amount of exchange that occurs.
D) rise as the number of middlemen increases.
38) In economic theory, transaction costs refer to
A) fees charged by brokers, traders, or other agents rather than by principals.
B) costs attributable to the operations of middlemen.
C) costs of arranging and carrying out voluntary exchanges.
D) costs of obtaining customers or of marketing a product.
E) costs not borne by the persons creating them.
39) Government certification of the weights and measures used in business can be justified
because
A) no business operated for profit would have any interest in weighing and measuring
accurately.
B) people cannot be trusted.
C) government officials, unlike private parties selling for profit, have no incentive to cheat.
D) it reduces total transaction costs below what they would be if all individual buyers or sellers
had to check for themselves.
40) If no beautification projects were undertaken in a city except by private individuals or firms,
the city would almost surely be less beautiful than otherwise comparable cities because
A) aesthetic standards vary so widely.
B) it is extremely difficult to induce people to pay on a voluntary basis for the pleasure they
receive from urban beautification projects.
C) people may enjoy beauty, but they are not willing to pay for it.
D) private individuals and firms generate more external costs than benefits.
41) Positive externalities and high transaction costs make voluntary social cooperation difficult
because they
A) are also obstacles to the effective working of democratically controlled governments.
B) can be eliminated by government.
C) can best be reduced by abandoning persuasion and voluntary cooperation.
D) make government intervention necessary.
E) make it easier for cartels to operate effectively.
42) A free rider in economic theory is someone who does not contribute toward covering the cost
of goods which he desires because he
A) has a comparative advantage in defraying the cost of other goods.
B) knows his paying or not paying will make no difference in their availability to him.
C) regards all such costs as deadweight costs.
D) regards all such costs as transaction costs.
43) Positive externalities tend to create free-rider problems because positive externalities
A) appeal more to extroverts than to people who are reflective.
B) are spill over benefits to people who don’t pay for them.
C) are concentrated in the hands of people living on unearned income.
D) arise primarily from government programs.
44) The problem of “free riders” arises in a society when goods
A) can’t be provided exclusively to the people who pay for them.
B) cease to be scarce.
C) produced by government are provided to everyone.
D) supplied by the private sector are paid for from tax revenue.
E) wanted by everyone are priced too low.
45) The free rider problem causes goods not to be produced when
A) the opportunity cost of providing them is low.
B) the quantity supplied is greater than the quantity demanded.
C) they can’t be produced by government.
D) they can’t be provided exclusively to the people who pay for them.
46) From which of the following goods is it most difficult to exclude free riders?
A) A symphony orchestra concert
B) An interstate highway
C) An outdoor fireworks display
D) Postal service
47) From which of the following goods is it most difficult to exclude free riders?
A) Afternoon swimming lessons at the YMCA
B) The St. Patrick’s Day Parade in Boston
C) Bungy jumping at the state fair grounds
D) Grandstand seating at the Daytona 500
48) From which of the following goods is it most difficult to exclude free riders?
A) Tickets for the Newport Jazz Festival
B) Food and beer sold at the Newport Jazz Festival
C) Programs and souvenirs sold at the Newport Jazz Festival
D) A radio simulcast of the Newport Jazz Festival
49) A free rider is someone who
A) uses a bus transfer after it has expired.
B) doesn’t have to pay transaction costs.
C) can obtain a desired good without paying for it and therefore has no incentive to contribute to
the costs of making it available.
D) can produce a good at zero marginal cost.
50) From which of the following is it least difficult to exclude free riders?
A) A library book
B) Landscaping on the edges of urban expressways
C) Police protection
D) Fireworks displays
51) A “free rider” is someone who
A) pursues his or her own selfish interests.
B) generates negative externalities for everyone else.
C) accepts benefits without paying his or her share for receiving the benefits.
D) actually improves the efficiency of market processes by buying low and selling high.
52) What’s another term for “positive externality”?
A) Negative externality
B) Spillover cost
C) Spillover benefit
D) The “pay-as-you-go” principle
53) How does the social problem of positive externalities differ from the problem created by
negative externalities?
A) Positive externalities can create free-rider problems; negative externalities do not.
B) Positive externalities are created by altruistic people; negative externalities are not.
C) Negative externalities can create free-rider problems; positive externalities do not.
D) Negative externalities are created by selfish people; positive externalities are not.
E) Trick question: neither positive nor negative externalities create a social problem.
54) Households in the former Yugoslavia were required to declare the number of radios and
television sets they owned, and to pay a monthly tax on each. From the perspective of the free-
rider problem, the radio and TV taxes attempted to
A) generate negative externalities on Yugoslav households.
B) generate positive externalities on Yugoslav households.
C) coerce households into paying for the radio and television broadcasts.
D) coerce households into listening less to radio and watching less television.
55) The demand for government regulation of sellers most often originates with
A) consumers.
B) economists.
C) politicians.
D) sellers.
56) A system of laws and courts generates positive externalities because
A) only governments are capable of creating such systems.
B) people cannot choose whether or not to obey the law.
C) people who disobey the law benefit from the existence and enforcement of rules applicable to
all.
D) such a system could not exist without the approval of a majority.
57) Economist’s can justify supporting education through taxation on which of the following
grounds?
A) Education generates spillover benefits.
B) Low-income people could not otherwise afford education.
C) Most economists are educators.
D) Free education extends equal opportunity to all.
E) Public education is more efficient than allowing education to be provided by the market.
58) According to economists, national defense can be supported through taxation because
A) national security generates no benefits for which any one would be willing to pay.
B) people are insufficiently patriotic.
C) taxation makes everyone pay in proportion to the benefits they receive.
D) the people who refuse to pay the cost cannot easily be excluded from the benefits.
E) we must choose between coercion through taxation and coercion through a draft.
59) Taxing some citizens to provide welfare grants to other citizens has been called by some
“coercive charity.” The economist’s case for “coercive charity” assumes
A) it is efficient to transfer a dollar from a wealthy person to someone with little income.
B) morality cannot be legislated.
C) people are basically selfish.
D) people who genuinely want the poor to be helped often do not provide any help.
E) redistributing income promotes more rapid economic growth.
60) Legislators are not likely to substitute money transfers to low-income people for in-kind
benefits (e.g., food stamps, health care) because
A) low-income people generally do not know how to manage money effectively.
B) low-income people prefer in-kind transfers.
C) special interest groups benefit from the system of in-kind transfers.
D) giving cash to the poor would necessitate a tax increase.
61) Government officials facing the challenge of an election will tend to make decisions
A) acceptable to a majority whether or not the majority is informed on the issues.
B) expressing the public interest.
C) favoring the long run interests of the majority.
D) that reflect a high rate of time discount.
62) Legislators who must stand for re-election every two years will tend to support
A) policies beneficial to all the people eligible to vote.
B) policies beneficial to all the people now living.
C) policies beneficial to all present voters and future generations of voters.
D) policies promising early benefits and deferred costs.
E) policies representing the public interest.
63) The property rights of commissioners appointed to the Food and Drug Administration
encourage them to
A) call for additional testing of a new drug even when a delay in approval is liable to cost more
lives than additional testing is likely to save.
B) make decisions in the interest of drug manufacturers.
C) make decisions in the interest of physicians and patients.
D) rush new drugs onto the market before they have been adequately tested.
E) work shorter hours and take longer vacations than employees in the food and drug industries.
64) Members of the Food and Drug Administration (FDA) will tend to require more testing of
proposed new drugs than is best from the point of view of people who use the drugs, because
FDA members
A) identify themselves with the drug industry.
B) have the technical knowledge to decide what is best for the users of drugs.
C) are blamed if new drugs turn out to have damaging side effects but are not blamed for the
lives lost or discomfort suffered because new drugs were not available sooner.
D) pay for the testing from their own budget and consequently can do as they please.
65) When we apply economic analysis to democracies, it is reasonable to expect government
policies to be serving
A) many extremely partial or special interests.
B) the interests of business generally.
C) the interests of consumers.
D) the interests of the majority.
E) the interests of the people who most highly value the results of government actions.
66) According to the economic analysis of democracy, citizens do not acquire sufficient
information to vote intelligently because
A) money controls the media.
B) private concerns matter more to them than public affairs.
C) they are apathetic about government.
D) they know their vote doesn’t really matter.
E) the country is a republic, not a democracy.
67) Legislators in a democracy are more likely to support special interests than the broad
interests of citizens generally because
A) incumbents have such powerful advantages in election campaigns.
B) money plays such a large role in political campaigns.
C) they cannot know what the public interest requires in the absence of market information.
D) they do not have to fear being voted out of office.
E) they pay attention to the people paying attention to them.
68) A citizen who acquires good information about the candidates before voting in a presidential
election thereby
A) imposes spillover costs on all other registered voters.
B) increases the probability others will also acquire information before voting.
C) incurs a substantial cost; yet, his vote no discernible effect on the election.
D) makes it much more likely a candidate will be elected who will promote that voter’s interests.
E) makes it much more likely a good candidate will be elected.
69) Citizen voters are typically ignorant of many political issues because
A) information is not a good.
B) information is only a free good.
C) information is a scarce good.
D) politicians have always conspired to keep voters misinformed.
70) As applied to voter behavior, the “rational ignorance” hypothesis claims
A) voters will have no incentive to be informed of political issues.
B) voters will stop gathering information once the marginal costs exceed the marginal benefits.
C) voters only vote on the basis of their instinctual or gut feelings.
D) voters are selfish.
71) From the economic point of view, why will an avid downhill skier devote many hours to
reading, comparing, and testing a new pair of ski boots but only a few hours to deciding who to
vote for in the state senator race?
A) Ski boots are ultimately more important to society than state senators.
B) He needs new ski boots; he does not need a new state senator.
C) In his estimation, being highly informed about ski boots is a better use of his time compared
to being highly informed about potential state senators.
D) He is selfish.
72) From the economic point of view, why might a sophomore in college spend a great deal of
time getting to know an attractive classmate rather than getting to know the issues behind the
president’s deficit-reduction policies?
A) She is selfish.
B) She considers it a more productive use of her time.
C) She obviously has no interest in politics.
D) The federal budget deficit cannot possibly affect her life.
73) From the economic point of view, why might a retired couple spend four hours a day on the
golf course when they could have spent their time becoming better informed about their elected
representative in Congress?
A) They are going to die soon so it really doesn’t matter.
B) They must love golf and hate politics.
C) The congressperson must have wronged them.
D) They consider golfing a more productive use of their time.
74) In the economic way of thinking, all ignorance is ultimately
A) rational ignorance.
B) irrational.
C) inefficient.
D) unjust.
E) selfish.
75) Economic theory assumes citizens vote
A) in total ignorance of each issue.
B) in their own interest.
C) in the public interest.
D) by systematically discounting their long-run interests.
76) Economic theory assumes elected representatives in government vote
A) in the public interest.
B) without any interest.
C) in their own interest.
D) in complete harmony with the interests of the majority of citizen-voters.
77) Why are elected representatives far more likely to be informed about the issues on which
they vote, compared to the typical citizen-voter?
A) A politician loves politics; citizens hate it.
B) A politician is more patriotic than citizens.
C) A politician is rationally ignorant; citizens are just plain ignorant.
D) A politician’s vote has a far greater probability of affecting the outcome, compared to a
citizen’s vote.
78) People are most likely to make their opinions on a potential piece of legislation known to
their representatives when
A) the legislation matters greatly to them, whether or not it affects their private interests.
B) the legislation will affect their private interests substantially.
C) they believe their actions will make enough difference to justify the effort.
D) they can do so at low cost to themselves.
79) If Congress conducted public hearings to decide whether subsidies should be granted to the
steel industry, taxpayers would not be well represented at the hearings because
A) no hearing room would be large enough to hold all the taxpayers who would want to testify.
B) single taxpayers do not have a large enough stake in the issue to justify the cost of attending
the hearings.
C) taxpayers would not gain or lose, no matter how the issue was decided.
D) they are apathetic.
E) they know only money buys votes.
80) Alexis de Tocqueville observed in his Democracy in America: “There is no country in which
everything can be provided for by the laws, or in which political institutions can prove a
substitute for
A) common sense and morality.”
B) economic development.”
C) police and prisons.”
D) supply and demand.”
E) the private pursuit of private interests.”
81) According to your text, what is the significant distinction between the government and the
nongovernment sector of society?
A) Government decisions are made by collectives rather than by individuals.
B) Government is usually granted the right to coerce adults.
C) Government officials pursue the public interest rather than narrow special interests.
D) Government takes the long-run view and thus cares for the interests of future generations.
E) The government sector is not characterized by competition.
82) What is the main rationale economists provide for assigning government the responsibility of
protecting people against foreign aggressors?
A) It would be too dangerous to allow citizens to keep and bear arms for the purpose of forming
militias to defend their communities.
B) Most people are patriotic only when the government is involved.
C) “National defense” must by necessity be nationalized.
D) People will not risk their lives unless government requires them to do so.
E) Private providers could not exclude non-payers from the benefits.
83) When someone says positive externalities coming from education justify subsidization of
education, they are saying
A) education must be uniform in a democratic society.
B) government ought to be the exclusive provider of at least elementary education.
C) many people cannot afford to educate their children.
D) private schools tend to be inefficient.
E) students capture only part of the benefits from attending school.
84) Government is viewed in the economic way of thinking as many different people interacting
on the basis of
A) fear of punishment rather than hope for reward.
B) legal considerations rather than profitability.
C) prevailing property rights.
D) principles of cooperation rather than of competition.
E) regard for the public interest rather than private interest.
85) According to the textbook, government supplies police protection because
A) it is difficult to supply police protection exclusively to people who pay for it.
B) police protection is every citizen’s right.
C) police use force, violence, and coercion.
D) the supply of police protection is in the public interest.
E) the value of police protection is greater than its marginal cost.
86) Which of the following is probably producing positive externalities?
A) A citizen who becomes well-informed about community issues
B) A homeowner who maintains a beautiful lawn
C) A person with an engaging smile
D) All of the above.
E) None of the above.
87) The majority of the members of the U.S. Congress want to retain the so-called Fairness
Doctrine as a control over television and radio broadcasters because
A) competition by itself cannot produce fairness.
B) government oversight is required to assure equal time for conflicting points of view.
C) television and radio are local monopolies to a large extent.
D) the air waves belong to the public.
E) the doctrine gives more power and influence to members of Congress.
88) The prisoners’ dilemma is a tool of social analysis, and it shows why
A) individuals sometimes behave in ways inconsistent with their own best interest.
B) judges sometimes hand down sentences heavier or lighter than the law recommends.
C) people who break the law and are caught are behaving irrationally.
D) people who break the law and are caught are behaving rationally.
E) societies sometimes produce situations no member of the society wants.
89) According to the authors of your text, the phrase “property rights” can be substituted with the
phrase
A) “property wrongs.”
B) “what people think they can get away with.”
C) “animal rights.”
D) “rugged individualism.”
E) “free market capitalism.”
90) Who among the following enjoys some form of property rights?
A) A common homebody
B) A small business owner
C) A bondholder
D) A state senator
E) All of the above.
91) Which confers a set of property rights?
A) A driver’s license
B) A land contract
C) A passing score on a C.P.A. exam
D) A successful election campaign
E) All of the above.
92) According to the authors of your text,
A) society could continue to exist even if people were totally selfish.
B) genuine concern for the well-being of others is essential if any social cooperation at all is to
occur.
C) anarchism, or a society without a coercive government, is the only socio-political system
consistent with free markets.
D) rules are necessary for government institutions, but not for market institutions.
93) According to the economic way of thinking, it is efficient to support a system of law and
order through taxation because
A) we need law and order.
B) law and order are not free goods.
C) law and order create significant spillover benefits.
D) citizens ultimately despise law and order.
94) Governments usually provide national defense from tax funds because
A) everyone wants national defense.
B) national defense benefits everyone.
C) more security is better than less.
D) it is hard to supply national defense exclusively to the people who willingly pay for it.
95) According to the authors of your text, a politician’s interest in getting reelected
A) expands the politician’s time horizon.
B) leads the politician to concentrate on policies capable of generating short-run benefits.
C) further encourages the politician to conform more to acting in the public interest.
D) is based chiefly on selfish interest.
96) Joe Doakes is running for reelection. Economic theory predicts he has a strong incentive to
A) heavily discount the value of all future costs of his policies.
B) try to provide as many benefits to his constituents as possible prior to the next election day.
C) do both A and B above.
D) do none of the above.
97) According to economic theory, the political process tends to
A) benefit every participant equally.
B) harm every participant equally.
C) concentrate benefits in the hands of special interest groups and disperse the costs throughout
the uninformed voters.
D) support public projects that clearly pass a strict benefit-cost analysis.
98) A price support on milk is not in the interest of milk drinkers, so why do elected public
officials successfully implement milk price supports?
A) Milk price supports are in the public interest.
B) A small number of households (dairy farmers) gain a great deal, while the costs of the support
program is spread among millions of other (milk drinking) households.
C) Dairy farmers are selfish.
D) Milk drinkers are generally unselfish.
99) For many years the United States was able to retain a system for drafting young men into the
armed forces because
A) the public feared the menace of Communism.
B) patriotism had declined and so volunteers were not available.
C) young men were not willing to risk their lives.
D) many people adversely affected found it more to their advantage to use some personal escape
route than to attack the system directly.
100) A judicial system for resolving disputes creates benefits even for people who never use it
because
A) people are compelled to obey court decisions whether they want to or not.
B) judicial decisions generate uniform rules, which everyone can count on.
C) silence gives consent.
D) the social contract entitles everyone to share in the benefits from goods produced by
government.