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| 1 | |
Examples of government failure include all of the following except: |
| | A) | rent-seeking behavior |
| | B) | logrolling |
| | C) | bundled choices |
| | D) | tax incidence |
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| 2 | |
Suppose that product X is taxed at a constant rate of 10%. However, high-income individuals spend a greater proportion of their income on X than low-income individuals. The tax on product X is: |
| | A) | regressive |
| | B) | proportional |
| | C) | progressive |
| | D) | elastic |
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| 3 | |
Sellers will bear the largest burden of an excise tax if: |
| | A) | both demand and supply are elastic |
| | B) | both demand and supply are inelastic |
| | C) | demand is elastic and supply is inelastic |
| | D) | demand is inelastic and supply is elastic |
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| 4 | |
According to public choice theorists, which of the following circumstances will most likely lead to approval of a given public project? |
| | A) | Immediate costs and benefits |
| | B) | Delayed costs and benefits |
| | C) | Immediate benefits and delayed costs |
| | D) | Delayed benefits and immediate costs |
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| 5 | |
As the election nears, the positions of the major presidential candidates tend to converge. This is an implication of: |
| | A) | the Coase Theorem |
| | B) | the median voter model |
| | C) | political logrolling |
| | D) | government failure |
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| 6 | |
The paradox of voting suggests that: |
| | A) | public goods will be overproduced |
| | B) | public goods will be underproduced |
| | C) | logrolling will lead to rent-seeking outcomes |
| | D) | majority rule voting may be incapable of rank ordering public projects consistently |
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| 7 | |
Many states collect a substantial fee for fishing and hunting licenses, the proceeds of which are used to finance fish and wildlife management. This "tax" reflects: |
| | A) | the benefits-received principle |
| | B) | the ability-to-pay principle |
| | C) | the bundled-choice principle |
| | D) | negative incidence |
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| 8 | |
Consider the following observations regarding the markets for products A, B, C, and D:
A: demand and supply are both relatively inelastic
B: demand and supply are both relatively elastic
C: demand is elastic and supply is inelastic
D: demand is inelastic and supply is elastic
In which market will the efficiency loss of an excise tax be the smallest? |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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| 9 | |
Political office holders must typically take stands on and make decisions regarding hundreds of different issues, but voters typically vote for one of only two candidates. This problem reflects: |
| | A) | the voting paradox |
| | B) | the Coase Theorem |
| | C) | limited and bundled choices |
| | D) | pork-barrel politics |
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| 10 | |
Suppose the only three members of society will receive marginal benefits from a proposed public project equal to $300, $500, and $800, respectively. However, each must pay taxes of $400 to pay for the total cost. In the absence of vote trading, a majority rule vote will: |
| | A) | pass this project and resources will be allocated efficiently |
| | B) | pass this project and resources will be overallocated to the project |
| | C) | defeat this project and resources will be allocated efficiently |
| | D) | defeat this project and resources will be underallocated to the project |
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