Principles of Microeconomics

David Shapiro, Daniel MacDonald, Steven A. Greenlaw

Chapter 18

Public Economy - all with Video Answers

Educators

Chapter Questions

Problem 1

Based on the theory of rational ignorance, what should we expect to happen to voter turnout as the internet makes information easier to obtain?

EA

Erwin Antoni

Numerade Educator

Problem 2

What is the cost of voting in an election?

Srikar Katta

Numerade Educator

Problem 3

What is the main factor preventing a large community from influencing policy in the same way as a special interest group?

EA

Erwin Antoni

Numerade Educator

Problem 4

Why might legislators vote to impose a tariff on Egyptian cotton, when consumers in their districts would benefit from its availability?

Srikar Katta

Numerade Educator

Problem 5

True or false: Majority rule can fail to produce a single preferred outcome when there are more than two choices.

EA

Erwin Antoni

Numerade Educator

Problem 6

Anastasia, Emma, and Greta are deciding what to do on a weekend getaway. They each suggest a first, second, and third choice and then vote on the options. Table 18.2 shows their first, second, and third choice preferences. Explain why they will have a hard time reaching a decision. Does the group prefer mountain biking to canoeing? What about canoeing compared to the beach? What about the beach compared to the original choice of mountain biking?
$$
\begin{aligned}
&\begin{array}{l|l|ll}
\hline & {\text { Anastasia }} & {\text { Emma }} & {\text { Greta }} \\
\hline \text { First Choice } & \text { Beach } & \text { Mountain biking } & \text { Canoeing } \\
\hline \text { Second Choice } & \text { Mountain biking } & \text { Canoeing } & \text { Beach } \\
\hline \text { Third Choice } & \text { Canoeing } & \text { Beach } & \text { Mountain biking } \\
\hline
\end{array}\\
&\text { TABLE } 18.2
\end{aligned}
$$

EA

Erwin Antoni

Numerade Educator

Problem 7

Suppose there is an election for Soft Drink Commissioner. The field consists of one candidate from the Pepsi party and four from the Coca-Cola party. This would seem to indicate a strong preference for CocaCola among the voting population, but the Pepsi candidate ends up winning in a landslide. Why does this happen?

EA

Erwin Antoni

Numerade Educator

Problem 8

How does rational ignorance discourage voting?

EA

Erwin Antoni

Numerade Educator

Problem 9

How can a small special interest group win in a situation of majority voting when the benefits it seeks flow only to a small group?

EA

Erwin Antoni

Numerade Educator

Problem 10

How can pork-barrel spending occur in a situation of majority voting when it benefits only a small group?

Srikar Katta

Numerade Educator

Problem 11

Why do legislators vote for spending projects in districts that are not their own?

EA

Erwin Antoni

Numerade Educator

Problem 12

Why does a voting cycle make it impossible to decide on a majority-approved choice?

Srikar Katta

Numerade Educator

Problem 13

How does a government agency raise revenue differently from a private company, and how does that affect the way government makes decisions compared to business decisions?

EA

Erwin Antoni

Numerade Educator

Problem 14

What are some reasons people might find acquiring information about politics and voting rational, in contrast to rational ignorance theory?

Srikar Katta

Numerade Educator

Problem 15

What are some possible ways to encourage voter participation and overcome rational ignorance?

EA

Erwin Antoni

Numerade Educator

Problem 16

Given that rational ignorance discourages some people from becoming informed about elections, is it necessarily a good idea to encourage greater voter turnout? Why or why not?

Srikar Katta

Numerade Educator

Problem 17

When Microsoft was founded, the company devoted very few resources to lobbying activities. After a highprofile antitrust case against it, however, the company began to lobby heavily. Why does it make financial sense for companies to invest in lobbyists?

EA

Erwin Antoni

Numerade Educator

Problem 18

Representatives of competing firms often comprise special interest groups. Why are competitors sometimes willing to cooperate in order to form lobbying associations?

Prashant Bana

Numerade Educator

Problem 19

Special interests do not oppose regulations in all cases. The Marketplace Fairness Act of 2013 would require online merchants to collect sales taxes from their customers in other states. Why might a large online retailer like Amazon.com support such a measure?

EA

Erwin Antoni

Numerade Educator

Problem 20

To ensure safety and efficacy, the Food and Drug Administration regulates the medicines that pharmacies are allowed to sell in the United States. Sometimes this means a company must test a drug for years before it can reach the market. We can easily identify the winners in this system as those who are protected from unsafe drugs that might otherwise harm them. Who are the more anonymous losers who do not benefit from strict medical regulations?

Srikar Katta

Numerade Educator

Problem 21

How is it possible to bear a cost without realizing it? What are some examples of policies that affect people in ways of which they may not even be aware?

Srikar Katta

Numerade Educator

Problem 22

Is pork-barrel spending always a bad thing? Can you think of some examples of pork-barrel projects, perhaps from your own district, that have had positive results?

Oluwadamilola Ameobi

Oluwadamilola Ameobi

Numerade Educator

Problem 23

The United States currently uses a voting system called "first past the post" in elections, meaning that the candidate with the most votes wins. What are some of the problems with a "first past the post" system?

EA

Erwin Antoni

Numerade Educator

Problem 24

What are some alternatives to a "first past the post" system that might reduce the problem of voting cycles?

Srikar Katta

Numerade Educator

Problem 25

AT\&T spent some $$\$ 10$$ million dollars lobbying Congress to block entry of competitors into the telephone market in 1978. Why do you think it efforts failed?

EA

Erwin Antoni

Numerade Educator

Problem 26

Occupy Wall Street was a national (and later global) organized protest against the greed, bank profits, and financial corruption that led to the 2008-2009 recession. The group popularized slogans like "We are the $99 \%$," meaning it represented the majority against the wealth of the top $1 \%$. Does the fact that the protests had little to no effect on legislative changes support or contradict the chapter?
Problems

Srikar Katta

Numerade Educator

Problem 27

Say that the government is considering a ban on smoking in restaurants in Tobaccoville. There are 1 million people living there, and each would benefit by $$\$ 200$$ from this smoking ban. However, there are two large tobacco companies in Tobaccoville and the ban would cost them $$\$ 5$$ million each. What are the proposed policy's total costs and benefits? Do you think it will pass?

EA

Erwin Antoni

Numerade Educator