Econ 100 Ch4 Study Guide

Centralized decision making in governments and businesses typically enhances efficiency.

False

What is economics?

A study of how people make choices to achieve goals with resource constraints.

What is the role of regulatory policy in an open market economy?

To set social norms to guide the results of the market economy.

Why do interest groups go to government to seek regulations on their own industry?

Because they want to protect themselves from competition.

Politics is the method of communication of the intensity of public interests in public decision making and is unaffected by individual self-interest.

False

Farmers represent a very small portion of the population; why are they so effective in getting subsidies and import protections which represent costs to most citizens?

Small groups with intense interests in policy are more effective in getting what they want from government than large groups with less intense interest in protecting themselves.

Why does the government prohibit consumers from purchasing pharmaceuticals from Canada?

Because the U. S. pharmaceutical industry asked the U. S. government to protect them from imports.

What is the objective of government when it is establishing the level of fines for polluters?

The level of the fine must equal or exceed the cost of stopping the pollution.

Elementary, high school, and college education is what kind of a product?

A dual private and public good.

Is it possible to achieve the efficiencies of the marketplace in the production of public goods?

Yes, public agencies can be responsible for causing public goods to be produced by entering the private market through competitive bidding.

What is true of the motivation for government regulations?

Sometimes regulations benefit existing producers by limiting the competition in the market.

Price is the silent communication device between producers and consumers in the private market; what is the communication device in the public market?

Politics

Why does government invest in education?

Because it is an investment in economic development.

Which of the following is most likely to result in externalities?

Playing the bass loudly on the car radio in town.

When governmental monopolies are responsible for producing a service:

There are few incentives for innovation and customer service.