ch5

If one person's consumption of a good does not preclude another's consumption, the good is said to be

nonrival in consumption.

Unlike a private good, a public good

has benefits available to all, including nonpayers.

In representative democracy, voters are ____________ and politicians are ______________.

principals; agents

Suppose lawyers seek legislation to limit the use of computer software that enables people to use their personal computers to self-prepare their own wills, trusts, and other legal documents. This is an example of

rent-seeking behavior.

The market demand curve for a public good

shows the total value that all individuals place on each additional unit of the good.

Government can reallocate resources away from private goods toward public goods, usually through

taxes and government spending.

The following data are for a series of increasingly extensive flood-control projects. For Plan D marginal costs and marginal benefits are

$28,000 and $12,000, respectively.

Assume that a government is considering a new social program and may choose to include in this program one of four progressively larger projects. The marginal cost and the marginal benefits of each of the four projects are given in the table below. Refer to the provided table and information. What is the net benefit of project D?

$5 billion

Answer the question based on the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. The collective willingness of this society to pay for the second unit of this public good is

$6.

Which of the following would be the best example of regulatory capture?

Executives from the Ford, General Motors, and Chrysler companies write the rules regulating automobile safety and fuel requirements.

Regulatory capture is said to have occurred when which of the following is true?

Rules and enforcement in an industry are heavily influenced by the industry being regulated.

Assume that a government is considering a new social program and may choose to include in this program one of four progressively larger projects. The marginal cost and the marginal benefits of each of the four projects are given in the table below. Suppose that the government chooses to do project C. What is the total cost and total benefit of doing project C?

Total cost is $8 billion, and total benefit is $12 billion.

Suppose the U.S. House of Representatives is debating a bill to fund construction and maintenance for the nation's highway system. Representative Sandy Shady adds a provision to the bill that would fund a new public art museum in her district. The authorization of expenditure for the museum would be an example of

an earmark.

As it relates to the political process, the principal-agent problem results from the

inconsistency between voters' interest in programs and politicians' interest in reelection.

"Vote for my special local project and I will vote for yours." This political technique

is called "logrolling."

The median-voter model implies that

many people will be dissatisfied with the size of government in the economy.

Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of

public and quasi-public goods.

According to some economists, the private sector is more efficient than the public sector mainly because

the private sector has a clear test of performance: profit and loss.

Nonexcludability describes a condition where

there is no effective way to keep people from using a good once it comes into being.