Reference no: EM13184579
Compared to ideal economic efficiency, when the production of a good generates external benefits, competitive markets will likely result in an output that is too
A) large and a price that is too high.
B) large and a price that is too low.
C) small and a price that is too high.
D) small and a price that is too low.
A car sells at different prices at different dealerships in a local market. If a consumer has imperfect information about the price of a car at each dealership, he should
A) always gather all available information about prices.
B) gather information about prices until the expected marginal benefit of more information equals the marginal cost of gathering it.
C) gather information about prices only if it can be gathered without cost.
D) ignore information about prices because it is irrelevant to making an "optimally imperfect" decision.
The problem created when it is difficult to exclude nonpaying customers is called the
A) consumption-payment link problem.
B) free-rider problem.
C) public sector dilemma.
D) asymmetric information problem.
Which of the following provides the best summary of the basic idea of public choice analysis?
A) Public choice analysis applies the principles of economics to political science topics.
B) Public choice analysis takes the principles of political science and applies them to the traditional topics of economics.
C) Public choice analysis uses the principle of majority rule to determine the efficiency of an action.
D) Public choice analysis indicates there is a sharp distinction between economic and political topics.
In a representative democracy, government action results from the
A) choices of voters.
B) legislative decisions by politicians.
C) political action of organized interest groups.
D) complex interaction of all of the above.
Which of the following increases the political power of special interest groups and makes counterproductive government action more likely?
A) logrolling and pork barrel legislation
B) the rational-ignorance effect
C) public goods
D) both a and b, but not c