Review Test Submission: Quiz 3
Content
Course Public Finance
Test
Quiz 3
Instructions
This quiz consist of 30 multiple choice questions. The first 15 questions cover the material in Chapter
4. The second 15 questions cover the material in Chapter 5. Be sure you are in the correct Chapter
when you take the quiz.
Question 1
2 out of 2 points
Which of the following is a good example of a congestible public good?
Answer
Correct Answer:
a road
Question 2
2 out of 2 points
A baseball field is:
Answer
Correct Answer:
a good that has characteristics of both public goods and private goods.
Question 3
2 out of 2 points
A means of creating a price-excludable public good is:
Answer
Correct Answer:
requiring costly tickets.
Question 4
2 out of 2 points
An example of an undesirable public good (or public “bad”) is:
Answer
Correct Answer:
poor air quality.
Question 5
0 out of 2 points
A free concert in a public arena is:
Answer
Correct Answer:
subject to consumption limits.
Question 6
2 out of 2 points
The marginal cost of making a given quantity of a congestible public good available to more
con-sumers is:
Answer
Correct Answer:
zero at first but eventually becomes positive and increasing.
Question 7
Public transportation is:
Answer
Correct Answer:
Question 8
2 out of 2 points
a congestible good.
The efficient output of a pure public good is achieved at the point at which:
Answer
Correct Answer:
the sum of the marginal benefits of all consumers equals the marginal
social cost of producing the good.
Question 9
The demand curve for a pure public good is:
Answer
Correct Answer:
each possible quantity.
obtained by adding the marginal benefit obtained by each consumer at
Question 10
2 out of 2 points
The nonrival property of pure public goods implies that the:
Answer
Correct Answer:
benefits enjoyed by existing consumers are unaffected as more consumers
enjoy a given quan-tity of the good.
Question 11
The principle of nonexclusion for pure public goods means that the benefits of the good:
Answer
Correct Answer:
Question 12
The free-rider problem:
Answer
cannot be withheld from consumers even if they refuse to pay.
Correct Answer:
becomes more serious as the number of persons involved in voluntarily
financing a pure public good increases.
Question 13
2 out of 2 points
Cable TV programming is an example of a:
Answer
Correct Answer:
price-excludable public good.
Question 14
2 out of 2 points
The marginal cost of providing a certain quantity of a pure public good to an additional consumer
after it is provided to any one consumer is:
Answer
Correct Answer:
zero.
Question 15
The monthly rental rate for a satellite dish antenna is $200. The maximum marginal benefit that any
resident of a condominium community will obtain per month from the antenna is $50. There are 100
residents in the community, none of whom values the antenna at less than $25 per month.
Assuming that the antenna is a pure public good for residents of the community,
Answer
Correct Answer:
their common use.
it is efficient for the members of the community to rent an antenna for
Question 16
If a person has multiple-peaked preferences for a pure public good,
Answer
Correct Answer:
that person will become worse off at first, but then become better off,
when moving away from his or her most-preferred political equilibrium.
Question 17
A community currently hires 10 security guards per week to patrol their neighborhood. Each
secu-rity guard costs $300 per week. Assuming that the tax-sharing arrangement agreed to results in
each of 300 voters paying the same tax share, each voter pays a weekly tax bill of:
Answer
Correct Answer:
$10.
Question 18
If all voters have single-peaked preferences for a pure public good, then the political equilibrium
under majority rule:
Answer
Correct Answer:
is the median most-preferred outcome of all voter’s voting.
Question 19
A voter’s most-preferred political outcome will be that for which the:
Answer
Correct Answer:
unit.
marginal benefit of a pure public good is equal to the voter’s tax share per
Question 20
A proposal to build new roads in a small town is up for a vote. Voter B estimates that his marginal
benefit of roads at the proposed new level would be $80 per year. This voter will vote against the
proposal:
Answer
Selected Answer:
if her tax share exceeds $80.
Correct Answer:
if her tax share exceeds $80.
Question 21
A small community currently taxes residents to provide monthly community concerts. Voter A
currently pays a tax per concert equal to $50 per month. This voter receives a marginal benefit of
$75 at the current political equilibrium number of concerts per month. Voter A:
Answer
Correct Answer:
increased.
would be made better off if the number of monthly concerts were
Question 22
Implicit logrolling results when:
Answer
Correct Answer:
two voters succeed in pairing two issues on a ballot that can pass together
but would fail indi-vidually.
Question 23
Arrow’s impossibility theorem states:
Answer
Correct Answer:
majority rule.
a unique political equilibrium for a public choice cannot exist under
Question 24
2 out of 2 points
Which of the following collective choice rules is likely to incur the highest political transactions
costs?
Answer
Selected Answer:
unanimous consent
Correct Answer:
unanimous consent
Question 25
2 out of 2 points
If the marginal social benefit of one more unit of a good is 10 and the marginal social cost of one
more unit of a good is 11, then:
Answer
Selected Answer:
a bureaucrat can increase the bureau’s budget if the total social cost is
below the total social benefit.
Correct Answer:
a bureaucrat can increase the bureau’s budget if the total social cost is
below the total social benefit.
Question 26
Which of the following collective choice rules is likely to have the lowest political externalities?
Answer
Correct Answer:
unanimous consent
Question 27
The demand curve for a pure public good is:
Answer
Selected Answer:
possible quantity.
obtained by summing the marginal benefits of each consumer for each
Correct Answer:
possible quantity.
obtained by summing the marginal benefits of each consumer for each
Question 28
Voter A will normally vote in favor of one security guard per week because his marginal benefit is
$125 and his tax share is $100 per week. Voter A receives zero marginal benefit from one concert a
week and would vote against it. Voter B receives $125 marginal benefit from one concert per week
but no marginal benefit from one security guard. One concert per week also will fail to gain a
majority when put to the vote. Assuming that both Voter A and Voter B will pay $100 per week in tax
for each concert and each security guard,
Answer
Correct Answer:
pairing the issues on one ballot will result in both Voter A and Voter B
voting against the com-bined issue.
Question 29
The plurality rule is:
Answer
Correct Answer:
a collective bargaining rule.
Question 30
A public choice is:
Answer
Correct Answer:
established rules.
one made through political interaction of many people according to