Equilibrium in the market for special interest benefits is determined where _____. a. the marginal cost of lobbying politicians is equal to the marginal benefits received from government b. the marginal political opposition is equal to the marginal political support c. the marginal price of a vote for a program is equal to the marginal […]
A lottery game pays $500 with .001 probability and $0 otherwise. The variance of the payout is A) 15.8. B) 249.50. C) 249.75. D) 499. ANSWER C
In 1960, national defense comprised about _____ of federal government expenditures. a. one quarter b. one-third c. one half d. two-thirds ANSWER c
An income tax provides an incentive to _____. a. work for large companies b. increase investment c. substitute away from being self-employed d. consume more and save less ANSWER d
Assuming that the two key restrictions on preferences fundamental to the median voter model hold, list the condition that must be satisfied for the outcome preferred by median voter to be considered economically efficient. List one real world example that comes close to this condition. ANSWER In order for the outcome preferred by the […]
True or false? The Edgeworth box version of inter-personal trade requires the individuals to be in close proximity of one another. A) True, that way they can see each other’s endowments and prices. B) False, begin in close proximity is not required for mutually beneficial trade to occur in the Edgeworth box. C) True, the […]
Under what conditions might the median voter’s preferred outcome not be selected through majority rule? What will be an ideal response? ANSWER The median voter’s preferred outcome might not be selected through majority rule if one or more voters have multiple-peaked preferences. That is, a particular voter might prefer an outcome farther away from […]
You are a government tax policy advisor. You are asked how to convert the U.S. income tax into a consumption tax. Which of the following is the best response? a. It already is a consumption tax. b. Flatten the brackets into one rate. c. Exclude the first $25,000 of income. d. Allow unlimited contributions into […]
On any given day we know a salesman can earn $0 with a 30% probability, $100 with a 20% probability or $300 with 40% probability. His expected earnings equal A) $0. B) $140. C) $300. D) It cannot be determined from the available information. ANSWER B
From 1960 to 1980, federal government spending on national defense _____. a. declined from about half to less than one quarter of all expenditures b. declined from one-third to less than one quarter of all expenditures c. increased from about half to nearly 60 percent of all expenditures d. increased from about one quarter to […]
