c17sendout

							1.       An economic analysis of the relationship between proposed legislation affecting major employers in each
         state and the voting patterns of Senators and representatives in Congress on that legislation would fit within
         the subcategory of economics called:
         A) the economics of fiscal policy.
         B) public choice theory.                                            Chapter 17
         C) behavioral economics.
         D) monetarism.

2.       Answer the next question on the basis of this table showing the marginal benefit that a particular public
         project will provide to each of the three members of a community. No vote trading is allowed. If the tax
         cost of this proposed project is $600 per person, a majority vote will:

 Voter     Marginal benefit
Xavier        $ 500
Yoho             200
Zest            2000

         A)   defeat this project and resources will be underallocated to it.
         B)   defeat this project and resources will be allocated efficiently.
         C)   pass this project and resources will be overallocated to it.
         D)   defeat this project and resources will be overallocated to it.

3.       Answer the next question on the basis of this table showing the marginal benefit a particular public project
         will provide to each of the three members of a community. No vote trading is allowed. If the tax cost of
         this proposed project is $600 per person, a majority vote will:

 Voter     Marginal benefit
Xavier         $800
Yoho            800
Zest            100

         A)   defeat this project and resources will be underallocated to it.
         B)   pass this project and resources will be allocated efficiently.
         C)   pass this project and resources will be overallocated to it.
         D)   pass this project and resources will be underallocated to it.

4.       The trading of votes by elected officials to secure favorable outcomes is called:
         A) splitting the difference.
         B) social engineering.
         C) logrolling.
         D) grandstanding.

5.       A situation in which society may not be able to rank its preferences consistently through majority voting
         refers to:
         A) logrolling.
         B) the paradox of voting.
         C) the median-voter model.
         D) the special-interest effect.
6.     Use the following to answer questions 6-8. In a choice between the highway and the lighthouse:

Public good           Larry             Curley              Moe
Lighthouse      third choice       first choice      second choice
Highway         second choice      third choice      first choice
Submarine       first choice       second choice     third choice

       A)     a majority of voters favor the lighthouse.
       B)     a majority of voters favor the highway.
       C)     the voters are indifferent as between the two.
       D)     no voter decision is possible.

7.     The inconsistency illustrated by the above table is that, while a majority of voters prefer the:
       A) highway to the lighthouse and the submarine to the highway, they also prefer the lighthouse to the
           submarine.
       B) lighthouse to the highway and the lighthouse to the submarine, they also prefer the submarine to the
           highway.
       C) highway to the lighthouse and the submarine to the lighthouse, they also prefer the submarine to the
           highway.
       D) lighthouse to the submarine and the highway to the submarine, they also prefer the highway to the
           lighthouse.

8.     The information contained in the above table illustrates:
       A) political logrolling.
       B) the median-voter model.
       C) the paradox of voting.
       D) the Coase theorem.

9.     The incidence of a tax pertains to:
       A) the degree to which it alters the distribution of income.
       B) how easy it is to evade the tax.
       C) who actually bears the burden of a tax.
       D) the progressiveness or regressiveness of tax rates.

10.    Use the following to answer questions 10-12. In the figure in which S is the before-tax supply curve and St
       is the supply curve after an excise tax is imposed. The total tax collection from this excise tax will be area:




       A)     ABCE + ECF.
       B)     ABCE.
       C)     ECF.
       D)     0BCG.
11.   Refer to the above figure in which S is the before-tax supply curve and St is the supply curve after an excise
      tax is imposed. The efficiency loss of this tax will be area:
      A) ABCE.
      B) ABCE + ECF.
      C) 0AEG.
      D) ECF.

12.   Refer to the above figure in which S is the before-tax supply curve and St is the supply curve after an excise
      tax is imposed. The burden of this tax is borne:
      A) equally by consumers and producers.
      B) most heavily by consumers.
      C) most heavily by producers.
      D) only by consumers.

13.   If the demand for a product is perfectly inelastic, the incidence of an excise tax will be:
      A) entirely on the buyer.
      B) mostly on the buyer.
      C) entirely on the seller.
      D) mostly on the seller.

14.   The efficiency loss of a tax is the idea that:
      A) in addition to taking income from the citizenry, taxes also increase the rate of inflation.
      B) taxes cause a decline in output for which marginal benefit exceeds marginal cost.
      C) taxes diminish incentives to work.
      D) government spends dollars less efficiently than do households and businesses.

15.   Suppose that Steve and Susan each perceive $200 of marginal benefit from a proposed new park, whereas
      Elizabeth perceives $800. If the tax levied on each for the park is $300, a majority vote will:
      A) defeat this project and resources will be underallocated to it.
      B) pass this project and resources will be efficiently allocated.
      C) pass the this project and resources will be underallocated to it.
      D) pass this project and resources will be overallocated to it.

       The next five questions refer to the below supply and demand graph for a product on which the
       government imposes an excise tax.
16.   What is the amount of the tax per unit?
a.    4
b.    6
c.    1
d.    2

17.   What is the total amount of the excise tax per unit paid by the consumer?
a.    4
b.    6
c.    1
d.    2

18.   What is the total amount of the excise tax per unit paid by the producer?
a.    4
b.    6
c.    1
d.    2

19.   What is the total tax revenue for government?
a.    200
b.    300
c.    50
d.    100

20.   What is the efficiency loss of the tax?
a.    10 units
b.    $10
c.    $20
d     50 units