Sjsu Public Finance Final

Front 1

When two people are on the contract curve, the allocation of goods

Back 1

is pareto efficient

Front 2

A government policy of providing free public K-12 education is most consistent with

Back 2

The First Thereom of Welfare Economics

Front 3

In a competitive market, prices adjust until all consumers find themselves

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on the contact curve

Front 4

If everyone's utility is given equal weight and a change in resource allocation results in one person's gain exceeding another person's loss, we can say that the new allocation

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increases welfare

Front 5

A dictator is most likely to

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maximize her own utility

Front 6

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

Back 6

the prices need to adjust further

Front 7

Gains from trade will be possible as long as

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marginal rates of substitution are equal across individuals.

Front 8

Joe and Rita each have some cookies and milk. Joe is willing to trade 2 cookies for an additional ounce of milk. Rita is willing to trade 4 cookies for an additional ounce of milk. If trading is possible, which of the following is most likely to occur?

Back 8

Joe will exchange milk with Rita for cookie

Front 9

The First Theorem of Welfare Economics can be expressed as

Back 9

the competitive equilibrium is efficient

Front 10

A situation is Pareto efficient if

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there is no way to make someone better off without making someone else worse off.

Front 11

If an allocation is Pareto optimal and if indifference curves between the two goods have no kinks, then

Back 11

two consumers who consume both goods must have the same MRS between them, but consumers may consume the goods in different ratios

Front 12

If a society only cares about efficiency and not equity, then

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all points on the contract curve yield the same level of social welfare.

Front 13

If society were to maximize the utility of its best-off member, the final allocation would be

Back 13

one in which one person gets everything.

Front 14

A tiny fishing village has 3 residents. Ann has a utility of 10, Bruce has a utility of 6, and Charlie has a utility of 7. If the mayor uses a Rawlsian social welfare function, the social welfare of this tiny village would be

Back 14

6

Front 15

No clearly defined socially preferred outcome may result when majority voting on outcomes because

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voting may lead to non-transitive preference.

Front 16

The Arrow impossibility theorem suggests

Back 16

there is no universally applicable decision rule in a majority-rule democracy.

Front 17

If society were to maximize the utility of its worst-off member, the final allocation would most likely be

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relatively egalitarian.

Front 18

A cake is to be shared by two people. Both desire the largest piece possible. One of the two will cut the cake. Under which of the following situations will the cutter adopt a Rawlsian social welfare function?

Back 18

The person not cutting the cake chooses the first piece.

Front 19

The fact that any Pareto-efficient equilibrium can be achieved through competition by adjusting endowments is called

Back 19

the Second Welfare Theorem.

Front 20

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

Back 20

the equilibrium is Pareto-efficient.

Front 21

Which of the following is NOT needed for the Median Voter Theorem to hold.

Back 21

voters have systematic preferences

Front 22

What is a voter's preferred-to-set for a status quo policy?

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The set of all alternatives they strictly prefer to the status quo.

Front 23

Assuming that voters have single-peaked preferences violates Arrow’s condition of:

Back 23

universal admissibility

Front 24

The agenda setter in a group...

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can often dictate the outcome.

Front 25

What is the Majority Rule Win Set of a status quo policy?

Back 25

The set of all alternatives that would beat the status quo in pairwise majority rule.

Front 26

Any policy change that results in a Pareto-superior allocation

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must increases welfare

Front 27

Hume's marsh draining game shows us that:

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When it is individually beneficial to contribute to a collective good there is no incentive to free ride.

Front 28

If Hume's marsh draining game is going to be played only once how could the players ensure cooperation.

Back 28

By credibly increasing Ui(x) or decreasing Ci(x) for both players.

Front 29

Hume's "marsh draining" game is the most like which of the classic games we studied?

Back 29

Prisoner's Dilemma

Front 30

Which two social virtues have been the subject of study with regard to their impact on the Prisoner’s Dilemma

Back 30

Altruism and Trust

Front 31

In which type of repeated marsh draining game are we most likely to see cooperation emerge.

Back 31

infinitely repeated game.

Front 32

Each of the following have the potential to diminish the effectiveness of a third party enforcer; with the exception of:

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Fear of enforcement

Front 33

Hume's marsh draining game shows us that:

Back 33

In the absence of third party enforcement of an agreement to cooperate, cooperation is difficult.

Front 34

What is "unraveling" in terms of a repeated normal form game?

Back 34

That in a finitely repeated game players play the "single shot" dominant strategy every round.

Front 35

In Hume's marsh draining game:

Back 35

There is one pure strategy Nash equilibrium and it is Pareto inferior.

Front 36

An example of using "private rewards" to solve collective action problems is:

Back 36

liability insurance for everyone who pays their dues in a labor union.

Front 37

Which of the following would be an example of a selective incentive under the by-product theory:

Back 37

Receiving coffee mugs when donating to National Public Radio fund raising campaigns

Front 38

The "collective action problem" is that:

Back 38

Even if everyone in a group wants the collective good, there is an incentive to free ride.

Front 39

In a step-good game, n is the number of people in a group and k is the number of people who must contribute to providing a collective good in order for it to be provided. For example, if in a group of n=100 you need at least 50 people to contribute before a collective good can be provided, then k=50.Under what condition is contributing any given player i's best response to contribute?

Back 39

When the number of other players contributing is k-1.

Front 40

As opposed to large groups, small groups have one of the following attributes which may contribute to collective action:

Back 40

Tendency to engage in repeat play; employing tit for tat strategies

Front 41

The collective action problem can be formalized as a:

Back 41

step-good game

Front 42

Using the Riker-Ordeshook voting versus abstention calculous (independent of any experiential factors); which of the following would hold true:

Back 42

A sensible U.S. voter would not vote in Presidential elections

Front 43

Who wrote the Logic of Collective Action?

Back 43

Mancur Olson

Front 44

What is pivotalness in a "step-good" game?

Back 44

When a player's decision is decisive in determining if the collective good is provided or not.

Front 45

In a step-good game, n is the number of people in a group and k is the number of people who must contribute to providing a collective good in order for it to be provided. For example, if in a group of n=100 you need at least 50 people to contribute before a collective good can be provided, then k=50.What is true about the size of k?

Back 45

When k is very close to n the collective good will likely be provided.

Front 46

Richard Wagner describes a “political entrepreneur” as:

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Someone who sees a cooperation dividend that is currently not being enjoyed

Front 47

In a market where supply and demand are both somewhat elastic, but demand is more elastic than supply, consumers will bear less of the burden of a tax because:

Back 47

consumers have a greater ability to change their behavior in response to the tax thanproducers do.

Front 48

A(n) __________ in the elasticity of supply or demand in a market for a good that is taxed would tend to __________ deadweight loss from that tax.

Back 48

increase; increase

Front 49

Ireland’s tax on plastic shopping bags successfully reduced consumer use of these bags because the:

Back 49

demand for plastic bags is very elastic.

Front 50

The price–quantity combination found where the supply and demand curves intersect is a unique combination that is efficient because:

Back 50

total surplus is maximized.

Front 51

The market overproduces common-resource goods because private decision-makers consider __________ costs but society experiences __________ costs.

Back 51

internal; internal and external

Front 52

The tragedy of the commons:

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gives rise to a negative externality.

Front 53

Which of the following is the best example of a common-resource good?

Back 53

fish in a lake

Front 54

The quantity produced of a common-resource good is likely to deviate from the socially optimal quantity because:

Back 54

there is an incentive to overproduce the good.

Front 55

The air is a:

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public good.

Front 56

Common-resource goods are:

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rival, like private goods, and nonexcludable, like public goods.

Front 57

The pollution emitted by your car is an example of a(n):

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external cost

Front 58

__________ can be jointly consumed by more than one person, and nonpayers are difficult to exclude.

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public goods

Front 59

Which of the following characteristics best defines a club good?

Back 59

nonrival and excludable

Front 60

Which good is nonrival?

Back 60

listening to public radio

Front 61

Which of the following characteristics best defines a private good?

Back 61

rival and excludable

Front 62

Suppose twenty neighbors share a park. One of the neighbors, Al, leaves trash in the park. This bothers the other neighbors. According to Coase's Theorem, assigning the property rights to the park to Al

Back 62

might still not achieve the social optimum since coordinating the other nineteen neighbors can be costly.

Front 63

The third-party problem:

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occurs when a market activity leads to a negative or a positive externality.

Front 64

If children go to school and become productive members of society,

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a positive externality is created by the schools.

Front 65

If a production process generates pollution, then a competitive market will produce more of the good than is socially optimal because

Back 65

firms ignore the costs of production that they do not incur.

Front 66

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, the optimal level of trash in the park can be achieved if

Back 66

someone is assigned property rights to the park.

Front 67

If a production process generates pollution, then a competitive market will

Back 67

produce more of the good than is socially optimal.

Front 68

When the price of a good decreases and all else is held constant:

Back 68

producer surplus decreases.

Front 69

All else being held constant, an increase in the price of a good would necessarily:

Back 69

decrease consumer surplus

Front 70

When a tax is imposed on some good, what happens to the amount of the good bought and sold?

Back 70

it decreases

Front 71

Which of the following statements is concerned with efficiency rather than equity?

Back 71

Excise taxes tend to raise prices for consumers.

Front 72

The incidence of a tax reflects:

Back 72

who bears the burden of the tax.

Front 73

When demand is perfectly elastic, the demand curve is:

Back 73

horizontal

Front 74

In a market where supply and demand are both somewhat elastic, but demand is more elastic than supply, consumers will bear less of the burden of a tax because:

Back 74

consumers have a greater ability to change their behavior in response to the tax thanproducers do.

Front 75

Taxes will almost always cause consumer prices to increase. How much they increase depends on:

Back 75

the elasticities of supply and demand.

Front 76

If a tax is imposed on a good with a perfectly elastic demand, the burden of the tax will be borne:

Back 76

by producers only

Front 77

Consumers will lose no consumer surplus due to a tax if demand in their market is perfectly elastic because:

Back 77

consumers can effortlessly change their behavior in response to the tax.

Front 78

Producer surplus is the difference between:

Back 78

the price the producer receives and the willingness to sell a good.

Front 79

How successful would a $1 excise tax on each Little Caesar’s pizza be in generating revenue if Little Caesar’s is the only pizza chain that is taxed?

Back 79

You can get pizza at many other place, which makes the demand for Little Caesar’s relatively elastic and, as a result, the tax revenue collected will be small.

Front 80

In the long run, both supply and demand tend to become more elastic. This suggests that, in the long run, the:

Back 80

deadweight loss from a tax will be greater than it is in the short run.

Front 81

Taxing goods with very elastic supply generates more deadweight loss than taxing goods with very inelastic supply because:

Back 81

the change in producer behavior is greater.

Front 82

Holding all else constant, when the price of a good increases:

Back 82

consumer surplus decreases.

Front 83

In most cases, taxes reduce economic efficiency because:

Back 83

they reduce consumer surplus and producer surplus.

Front 84

A tax on consumers of a good would shift the __________ curve down and cause the price paid by consumers to __________.

Back 84

demand; increase

Front 85

Consider a housing development built near an existing airport. After the houses are occupied, homeowners complain that the airport imposes a negative externality on them and it should be moved or otherwise limited. Is the airport a negative externality?

Back 85

No, if the original property values reflect the costs imposed by the airport.

Front 86

The productivity of the employees of a bakery is reduced because of the excessive noise coming from a next door car repair shop. This is an example of

Back 86

a negative externality

Front 87

If a production process creates positive externalities, a competitive market produces too few positive externalities because the producer

Back 87

does not receive compensation for the externalities.

Front 88

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, the optimal level of trash in the park can be achieved if

Back 88

someone is assigned property rights to the park.

Front 89

You share a house with two other people. You are a concert pianist and often practice at home. One roommate enjoys listening to you practice, but the other does not. For the roommate who enjoys listening to you play, this is an example of __________; for the other roommate, it is an example of __________.

Back 89

a positive externality; a negative externality

Front 90

The exclusive privilege to use an asset is called a(n)

Back 90

property right.

Front 91

It is best to reduce the level of pollution:

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as long as the benefit exceeds the cost of doing so.

Front 92

Which of the following is a benefit of internalizing a negative externality?

Back 92

The deadweight loss is eliminated.

Front 93

If a market is subject to a positive externality,

Back 93

there is only one demand curve.

Front 94

Your roommate is studying to be a drummer in a rock band. She practices in your apartment every evening for three hours and the noise makes it difficult for you to concentrate. This is an example of:

Back 94

the third-party problem.

Front 95

The cost of an activity paid for by the individual and the third party is defined as a(n):

Back 95

social cost.

Front 96

Positive externalities are created when

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your neighbor plants beautiful trees and flowers in her yard.

Front 97

A cap-and-trade policy is an efficient method of reducing pollution because:

Back 97

only high-cost firms will be forced to reduce pollution.

Front 98

Students who talk loudly with each other in class

Back 98

create an externality because other students cannot follow the lecture as well.