Market Allocation vs Political Process Quiz

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Questions and Answers

Which of the following is a key difference between the market and political sectors?

There is a one-to-one link between payment for and receipt of a good in the political sector, but this is often not true in the market sector

Government can use coercive force against adults to modify their behavior or force them to pay for a good or service (correct)

Voters have a strong incentive to acquire information to make better decisions in the market sector

Scarcity is a constraint in the market sector but not the political sector

In the market sector, which of the following is true about consumers' incentive to acquire information?

Consumers' incentive to acquire information is the same as in the political sector

Consumers do not have much incentive to acquire information (correct)

Consumers have a strong incentive to acquire information that will help them make better decisions

Consumers' incentive to acquire information is not a relevant factor in the market sector

Which of the following is a key characteristic of government that differentiates it from private firms?

Government can escape the constraints imposed by scarcity

Government can direct resources in a manner that serves the private interest of individuals

Government can use coercive force against adults to modify their behavior or force them to pay for a good or service (correct)

Government can produce goods and services that people value

Which of the following is a key difference between the market and political sectors in terms of the link between payment and receipt of a good?

In the market sector, there is a one-to-one link between payment for and receipt of a good, but this is often not true in the political sector Signup and view all the answers

Which of the following is a key constraint present in the market sector but not the political sector?

Scarcity Signup and view all the answers

In the political sector, which of the following is true about voters' incentive to acquire information?

Voters have a strong incentive to acquire information that will help them make better decisions Signup and view all the answers

According to public choice theory, what is the primary motivation for politicians when enacting policies?

Gaining votes for reelection and support from contributors Signup and view all the answers

Which of the following statements about public choice analysis is true?

It develops a logically consistent theory based on how individual actors respond to incentives in the public sector. Signup and view all the answers

According to public choice theory, which of the following is most likely to be supported by a voter?

Candidates who provide the voter with the most personal benefits at the least personal cost Signup and view all the answers

When the tax to fund a government project is allocated among voters in proportion to the benefits they receive, which of the following is most likely to occur?

Projects that are productive (efficient) will tend to be favored by an overwhelming majority of voters Signup and view all the answers

In which case is the political process most likely to result in the acceptance of efficient projects and rejection of inefficient projects?

When the costs are highly concentrated, and the benefits are widespread among voters Signup and view all the answers

Which of the following statements regarding the political process is true?

When voters pay in proportion to benefits received, all voters will gain if the government activity is productive Signup and view all the answers

Study Notes