Econ 201 Final Exam:

Consumer subsidies shift the demand curve to the right , leading to higher prices and higher quantities for the subsidized product.

1:demand 2:right 3:higher 4:higher

The US government protects domestic sugar producers from foreign competition with a combination of tariffs and quotas on imported sugar, along with subsidies to domestic sugar producers. As a consequence of these policies:

A) US consumers pay significantly higher prices for sugar B) US candy and confection companies have closed factories and shipped jobs overseas C) US soft drink companies substituted HFCS for sugar, leading to possible public health problems (diabetes) D) all of the above is correct CORRECT

The US government protects domestic sugar producers from foreign competition with a combination of tariffs and quotas on imported sugar, along with subsidies to domestic sugar producers. As a consequence of these policies:

A) US consumers pay significantly higher prices for sugar B) US candy and confection companies have closed factories and shipped jobs overseas C) US soft drink companies substituted HFCS for sugar, leading to possible public health problems (diabetes) D) all of the above\ D is correct

Other than consumer subsidies, what factors contribute to persistent increases in prices of goods or services?

A) labor-intensive production processes B) Back of competition C) high fixed costs in the production process D) all of these D) is correct

lecture 29, 30 . 31 Match each good to the proper category

A) ocean tuna - common resource B) Asteroid deflection- public good C) free music downloads_ Non rival private good D) beer- private good E) Catfish- private good F) city wide mosquito control- public good

The presenter addresses how "choice involves comparing alternatives," and notes that this is true for both private choices (e.g. personal consumption) and public choices (e.g. politicians determining government policy). Another term for this concept is:

A) opportunity costs B) tradeoffs C) all of these C) all of these

When assessing the policy-making process, public choice economists are interested in:

A) politicians' incentives to downplay the true costs of government policies B) politicians' ability to foist the costs of government spending onto future generations through deficits C) the quid-pro-quo between politicians and lobbyists D) all of these D) is correct

lecture 27, 28 In "perfectly competitive" markets (a.k.a. "price taker" markets):

A) producers have no influence on the product's price B) producers can sell any quantity of output at the market price C) the profit-maximizing level of output occurs where Price = Marginal Cost D) all o these are correct d is the answer

When the exact same information is not shared by two parties on either side of a potential exchange, this situation is referred to as one involving asymmetric information

Asymmetric

Which US president is admired by Dr. Watts for speaking explicitly about the opportunity costs of government spending--particularly military spending?

Dwight Eisenhower

Public choice analysis begins with an assumption that people in government are acting strictly in accordance with the public's interest, not their own self-interest.

False

lecture 34, 35, 36 The labor demand curve is comprised of workers who are looking for jobs.

False

What describes the "profit maximizing rule" for a business in either a competitive or a monopoly industry ?

MR > MC

James Buchanan described public choice analysis as "Politics without _______"

Romance

A consumer subsidy can be defined as:

a grant of money from government to consumers of a good or service

Which product is non-rival at low usage levels, but becomes rival when more users pile in?

a public swimming pool

In the United States, the sugar industry (sugar farmers and sugar mills) represent:

a special interest group

chapter 32, 33 In the United States, the sugar industry (sugar farmers and sugar mills) represent:

a special interest group

What best defines the term "benevolent despot?"

an all-powerful individual acting in the public interest

What mechanism is commonly used to provide strong incentives for people to follow through on promised actions, such as showing up for a court hearing or complete a construction job on time?

bonding

To achieve the higher investment returns associated with greater risk, yet minimize that risk through diversification, what long-term, passive investment vehicle does Watts reccomend?

broad stock indexes

Parkinson's example of the Royal Navy in the post-World War I period represents:

bureaucracies tend to grow, even if their workload decreases

Consumers using government subsidies to purchase products or services for themselves represents which kind of spending:

category 3

lecture 37 Economists always ask:

compared to what?

Employers must offer a ____________ to attract workers to jobs that, for a given skill/ qualification level, are more dangerous, dull, or otherwise unattractive.

compensating differential

Small groups are often more politically influential than large groups due to:

concentrated benefits of government programs

If a good is both non-excludable and non-rival,

consumers won't pay, and multiple people can benefit at once

which best explains why supply curves usually slope towards?

cost rise with increased production.

If the price of orange juice rises 10%, and quantity of OJ consumed declines by 50% per week, OJ demand is

elastic

which term applies to knowledge that can be acquired and confirmed by observation

empirical

Dr. Watts like to say "(almost) anyone can become a millionaire if he/she starts investing at a young age." What phenomenon helps makes this possible?

exponential growth (compound interest)

The M1 Abrams Tank story indicates that politicians are motivated by careful considerations of opportunity costs and efficient use of resources.

false

Monopolies lead to: higher prices , lower quantities , and deadweight losses .

higher prices , lower quantities , and deadweight losses .

Under what conditions would a firm continue operating at a loss in the short run, rather than shutting down?

if revenue is greater than variable costs

The opportunity cost of consuming more of good A now, by means of borrowing, is:

less of good B, and less goods in the future.

which product is most likely to have the most elastic demand curve?

little teaser $5 pepperino pizza

Why do old people consistently vote at much higher rates than young people?

old people have lower opportunity costs, and more at stake in government programs

Working on behalf of special interest groups to obtain favorable laws and regulations from the government, how many members of Congress must lobbyists influence?

only a small number of key committee chairs and ranking members

In a competitive market environment: _____ attract entry of new firms. _____ force exit of (some) existing firms. In the long run, profits tend to be _____

profits; losses; eliminated

According to Watts and (most) economists, government should mainly subsidize:

public goods

what is equal at equilibrium?

quantity supplied and quantity demanded.

when a business sets prices below equilibrium, it often finds that it can't keep products in stock,. to correct this situation, the company will sooner or later raise its prices. this situation is known as?

shortage

How long has the United States featured patents--intentional grants of monopoly power for inventors--as part of its economic institutional system?

since the signing of the Constitution in 1789

What does Dr. Watts mean when he uses the term "spending pathology"?

spending money in an unhealthy, inefficient way

According to Friedman, which type of spending is most efficient (cost-minimizing) and effective (value-maximizing)?

spending your own money on yourself

The "concentrated benefits, dispersed costs" principle means:

taxpayers won't notice or resist most government spending, even if they think it's wasteful

according to dr. watts summary of marginal value theory, the value of a good is based on:

the benefit/ usefulness of the good in the combination with its scarcity.

What element do public choice theorists put at the "center stage" of their analysis?

the democratic electoral process

wages are determined by

the marginal product of labor (MPL)

"There's not a dime's worth of difference between the Republicans and the Democrats." To the extent this sentiment is true, it could be explained by:

the median vote theorem

"There's not a dime's worth of difference between the Republicans and the Democrats." To the extent this sentiment is true, it could be explained by:

the median voter theorem.

What forces can help bring an end to unjustified labor market discrimination--e.g. employers who are unwilling to hire people on the basis of race, religion, or sex, for jobs they are otherwise qualified to do?

the profit motive

According to most economists' way of thinking, the basic purpose of government is to provide public goods.

true

According to rational ignorance theory, people have weak incentives to become politically informed.

true

Accounting profits mean a firm is covering its explicit costs (i.e. paying all of its bills). Economic profits mean a business is earning more than what its owners could have achieved in their next-best investment opportunity.

true

For a signaling mechanism to be effective, it has to be costly enough that only those who possess the pertinent attribute(s) will be willing and able to obtain it.

true

From 1996 to 2016, college tuition in the US increased by roughly four times the rate of all consumer goods prices.

true

Low overall voter turnout rates are explained by the fact that people implicitly perform a cost/benefit analysis of voting at an individual level.

true

Marginal revenue (MR) is less than price for a monopoly, but is equal to price for a price taker in perfect competition

true

Public choice analysis is mainly interested in what kinds of policies are likely to emerge from real-world political processes.

true

economics derives from a greek term which referred to household management.

true

if a product is fungible, that means that units of the product are completely interchangeable.

true

the graph of the the marginal value curve of a good can be interpreted to show both the good's total value and its market value or price.

true

"Government overload" refers to:

trying to get government to do too much, when some of these could be done through markets

variable costs vary with a company's level of production; fixed costs are the same regardless of how much of the product/ service the business sells.

variable, fixed

According to public choice economics, ______ is to politicians as ______ is to entrepreneurs.

winning election: profits

Who famously stated, "Democracy is the worst system of government--except for all the rest."

winston Churchill