ECON 202
Test Bank: II Topic: Government Failure
The collective action problemmakes it hard for votersto counter the influence of special-interest groups.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Unintended consequences can resultfrom the government's desire to enforce laws uniformly.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Regulatory capture in government happens because the peoplewho are most qualified to supervise and regulate an industry oftentimes are or have beenthe leaders of the industry.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Deregulation of an industrywill always lead to an improvement in economic efficiency.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Loan guarantees providedby government will reduce the willingness of investors to take on the risk in a project.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
"Informal payments" or "under-the table fees" are a common form of corruption.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
The U.S. is among the countries that have very low levels of political corruption, as reported in the Global Corruption Barometer of 2013.
TRUE
Test Bank: II Topic: Governments EconomicRole
As long as government officialshave to be elected, they are always held accountable for their policy decisions and choices.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and listsome of the difficulties associated with managingand directing the government.
Test Bank: II Topic: Governments EconomicRole
Economic analysis would focus on the size of the government, in order to assess whetheror not it fosterseconomic efficiency.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-01 Describe how governments power to coerce can be economically beneficial and listsome of the difficulties associated with managingand directing the government.
Test Bank: II Topic: Governments EconomicRole
It is generally believedthat, because of the electionprocess, the incentives and pressures for internal efficiencyare stronger in the public sector than in the privatesector.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Critics of government contend that the market system createsincentives and pressures for internal efficiency that are absentin the publicsector.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
"Good economics" is about marginal costsand marginal benefits of specific projects; "good politics" is more about clear benefits and hiddencosts.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
The "principal-agent problem" often arisesin public choice when politicians pursue the best interestsof their constituents.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
In thinking about the "principal-agent problem" in a democraticgovernment, we assign the role of "principal" to the government.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
The special-interest effect in government is the reason why firms in some industries are willing to pay huge amountsof money to lobbyists.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
When the special-interest effect is the major reason for the passage of a government policy or project,then economic efficiency willalways improve.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
The "pork" in pork-barrel politics refers to government projects that politicians try to secure in favor of the common good for the whole nation.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Nobody gains from pork-barrel politicsother than the politicians.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Pork-barrel politics is a good illustration of the "clear benefits, hidden costs" perspective of politicians.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Unfunded liabilities are one consequence of the preference for "clear benefits, hiddencosts" by politicians.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Unfunded liabilities occur when the government considers long-termbenefits and costs of projects, and approves only those with positivelong-term net benefits.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
A budget deficit will require the government to issue bonds to fillin the gap in the budget.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Budget deficit is another name for the public debt.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
If the government runs a smaller budget deficit, then the publicdebt will decrease.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Only politicians, not the voters, are to blame for the problem of chronic budget deficits that many nations face.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Voters' preference for having government programs serve them is inherentlyin conflict with their preference to pay no taxes.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Monetary and fiscal policies are tools that the government can use to try to stabilize the economy.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
The politicization of monetary and fiscal policies tends to enhance their effectiveness in stabilizing the economy.
FALSE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
Because of the so-called "bundled choice" problem, voters often vote for candidates that they are not entirelyhappy with.
TRUE
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-02 Discuss government failureand explain why it happens.
Test Bank: II Topic: Government Failure
The collective action problemis the reason why there are no lobbyists representing the interestof general taxpayers or consumers in Washington, DC.
TRUE
Multiple Choice Questions
The study of public choice theory involves the economic analysis of the following, except
government decisionmaking.
actions by elected officials.
C. the impact of budgetdeficits on the public debt.
D. voting and elections.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Problems with collective decision making and policy making in government are subjects that are studied in an area of economics called public
A. finance.
B. choice.
policy.
interest.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Even in a democratic government, elected officials may end up pursuing policiesthat go against the preferences of the people due to the following reasons, except
A. the special-interest effect.
B. the invisiblehand of the market.
limited and bundled choice in elections.
the majority voting system.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Majority voting fails to incorporate the strength of the preferences of individual voters and therefore
reduces the power of the median voter.
is the primary reason for public sector failure.
C. may produce economically inefficient outcomes.
D. creates the opportunity for the fallacy of limiteddecisions.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Matt, Joe, and Teresa are the only citizens in a community.A proposed public good has a total cost of $1,000. All three citizens willshare an equal portion of thiscost in taxes. The benefit of the publicgood is $500 for Matt, $280 for Joe, and $260 for Teresa.In a majorityvote, this proposal will most likelybe
A. accepted, two in favor and one against.
B. defeated, two against and one in favor.
accepted, three in favor and none against.
defeated, none in favor and three against.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Matt, Joe, and Teresa are the only citizens in a community.A proposed public good has a total cost of $1,000. All three citizens willshare an equal portion of thiscost in taxes. The benefit of the publicgood is $500 for Matt, $280 for Joe, and $260 for Teresa.In a majorityvote, this proposal will most likelybe
A. accepted; the public good is produced,even though it is economically inefficient.
B. defeated; the public good is not produced, even though it would have been efficient to do so.
accepted; the public good is produced, which is economically efficient.
defeated; the public good is not produced,which is the proper outcome.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Matt, Joe, and Teresa arethe only citizens in a community.A proposed public good has a total costof $1,000. All three citizens will share an equal portion of thiscost in taxes. The benefitof the public good is $ 380 for Matt, $ 360 for Joe, and $ 200 forTeresa. In a majorityvote, this proposal will most likely be
A. accepted; the public good is produced,even though it is economically inefficient.
defeated; the public good is not produced,even though it would have been efficient to do so.
accepted; the public good is produced, which is economically efficient.
defeated; the public good is not produced,which is the proper outcome.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Abby, Ben, and Clara are the only citizens in a community.A proposed public good has a total cost of $1,000. Allthree citizens will share an equal portion of this costin taxes. The benefitof the public good is $400 each to Abby, Ben, and Clara. In a majorityvote, this proposal will most likely be
accepted; the publicgood is produced, even though it is economically inefficient.
defeated; the public good is not produced,even though it would have been efficient to do so.
C. accepted; the public good is produced, which is economically efficient.
D. defeated; the public good is not produced, which istheproper outcome.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Abby, Ben, and Clara are the only citizens in a community.A proposed public good has a total cost of $1,000. Allthree citizens will share an equal portion of this costin taxes. The benefitof the public good is $400 each to Abby, Ben, and Clara. Based on economicanalysis, the public good should
A. be produced, because the benefits are greater than the costs.
not be produced,because the costs are greater than the benefits.
be put to a vote and produced only if votersapprove it.
not be produced, even if voters vote in favorofit.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community.A proposed public good has a total cost of $1,000. All five citizens will share an equal portion of this costin taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majorityvote, this proposal will most likely be
accepted, four in favor and one against.
defeated, one in favor and four against.
C. accepted, three in favor and two against.
D. defeated, two in favor and three against.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community.A proposed public good has a total cost of $1,000. All five citizens will share an equal portion of this costin taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. Who are likely to vote in favor of this proposal?
Abby, Ben, Clara, and Joe
Ben, Clara, Joe, and Matt
Ben, Clara, and Joe
D. Abby, Ben, and Clara
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community.A proposed public good has a total cost of $1,000. All five citizens will share an equal portion of this costin taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majorityvote, this proposal will most likely be
A. accepted; the public good is produced,even though it is economically inefficient.
defeated; the public good is not produced,even though it would have been efficient to do so.
accepted; the public good is produced, which is economically efficient.
defeated; the public good is not produced,which is the proper outcome.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Majority voting may produce economically inefficient outcomes because it
does not always lead to fairresults.
requires everyone to vote and bear the costs.
C. does not consider the strength of individual voters' preferences.
D. does not providebenefits to everyone.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Interest groups result when people
A. in a certain zip code vote together.
B. who share strong preferences on a choiceband together.
do not all vote in elections.
do not have strong preferences on the issues to be voted on.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
The tradingof votes to secure favorableoutcomes on decisions that would otherwisebe defeated is called
median-voter trading.
the special-interest effect.
C. political logrolling.
D. the paradoxof voting.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Inefficiencies associated with majorityvoting may get resolvedthrough
using the median-voter model.
bureaucratic inefficiency.
the paradoxof voting.
D. political logrolling.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Which of the followingwould be an avenue for resolving the inefficiencies associated with majorityvoting?
A. political logrolling
progressive taxation
proportional taxation
the paradoxof voting
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Which would be an avenue for resolving the inefficiencies associated with majorityvoting?
the paradoxof voting
progressive taxation
proportional taxation
D. special-interest groups
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
A situationin which society may not be able to rank its preferences consistently through paired-choice majority voting is
A. the fallacyof limited decisions.
B. the paradoxof voting.
the median-voter model.
political logrolling.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
The major problemwith paired-choice majority voting is that the outcome
is constant.
is subjectto bribery and abuse.
C. may depend on the orderof the voting.
D. results in clear preferences among the choices.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Public GoodVoter XVoter YVoter ZStadium231Park123Jail312 264.
Refer to the provided table, which shows the ranked preferences of votersfor three alternative projects, with "1" being the top preference. In a paired-choice vote between a stadiumand a park,
A. a majorityof the voters would favor the park, 2-to-1.
a majorityof the voters would favor the stadium, 2-to-1.
a majorityof the voters would favorthepark, 3-to-0.
a majorityof the voters would favor the stadium, 3-to-0.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Public GoodVoter XVoter YVoter ZStadium231Park123Jail312 265.
Refer to the provided table, which shows the ranked preferences of voters for three alternative projects, with "1" being the top preference. In a paired-choice vote between a jail and a stadium,
A. a majorityof the voterswould favor the jail, 2 to 1.
B. a majorityof the voters would favor the stadium, 2 to 1.
a majorityof the voters would favor the jail, 3 to 0.
a majorityof the voters would favor the stadium, 3 to 0.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Public GoodVoter XVoter YVoter ZStadium231Park123Jail312 266.
Refer to the provided table, which showstheranked preferences of voters forthree alternative projects, with "1" being the top preference. In a paired-choice vote between a park and a jail,
a majorityof the voters would favor the jail, 3 to 0.
a majorityof the voters would favor the park, 3 to 0.
C. a majorityof the voterswould favor the jail, 2 to 1.
D. a majorityof the voterswould favor the park, 2 to 1.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Public GoodVoter XVoter YVoter ZStadium231Park123Jail312 267.
Refer to the providedtable, which shows the ranked preferences of voters forthree alternative projects,with "1" being the top preference. This situation illustrates the voting inconsistency where a majorityof voters prefer the
stadium overthe park, the park overthejail, and the jail overthe stadium.
park and jailover the stadium, and the jail overthe park.
C. stadium overthe jail, the jailover the park, and the park overthe stadium.
D. stadium and jail over the park, and the park over the jail.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
The sometimes inconsistent results comingfrom a series of paired-choice voting is due to
voters changing their preferences.
irrational preferences among some voters.
C. a normalconsequence of majority voting.
D. voters not having a good idea of their preferences.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
Voters are makinga choice to spend money on three projects: a dam, a school,or a road. In the choice betweenthe dam and theschool, the majorityfavors the school. In a choicebetween a dam and a road, the majority favors a dam. In a choicebetween a road and a school,the majority favors a road. These rankings indicate that majority voting may
result in economically efficient outcomes because of rent-seeking behavior.
reflect irrational preferences.
C. produce inconsistent choices.
D. lead to consistentchoices in spite of irrational community preferences.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes
When politicians support policies such as imposing punitive tariffs on imports, which are popularamong voters but which also reduce economic efficiency, we refer to this as
A. regulatory capture.
B. voterfailure.
limited and bundled choice.
paradox of voting.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 05-03 Appendix: Explain the difficulties of conveying economic preferences through majorityvoting.
Test Bank: II Topic: Public Choice Theory and Voting Paradoxes