29) 29) Price Quantity Refer to the competitive market diagram for product Z. Assume that the current market demand and supply curves for Z are D, and S1. If there are substantial external benefits associated with the production of Z, then A) consumers are paying too much for the good. B) government can improve the allocation of resources by subsidizing consumers of Z. C) government can improve the allocation of resources by imposing a per-unit tax on Z. D) a government subsidy for producers of Z would ensure that consumers are paying directly for all of the benefits they receive from Z. 30) (Consider This) Subsidies for mohair production illustrate 30) A) why special-interest effects are often characterized by concentrated benefits and diffuse costs. B) that larger groups carry greater political weight than smaller groups. C) why special-interest effects are often characterized by concentrated costs and diffuse benefits. D) the moral hazard problem. 31) 31) Public Good Adam Bob Carl Public Safety Second Choice Third Choice First Choice Parks First Choice Second Choice Third Choice Education Third Choice First Choice Second Choice Refer to the table. In a choice between public safety and parks, A) a majority of voters would favor public safety. B) the outcome would depend on which item was listed first on the ballot. C) a majority of voters would favor parks. D) no voter decision is possible.32) 32) Regulatory capture often occurs because of which of the following? A) Nearly everyone with expertise works in the regulated industry. B) Patent law allows firms to gain monopoly power easily and therefore control a market. C) Government officials want stronger control over industry regulation. D) Consumer groups are effective at lobbying the government for industry regulation. 33) A situation in which society may not be able to rank its preferences consistently through 33) paired-choice majority voting refers to A) the special-interest effect. B) the median-voter model. C) logrolling. D) the paradox of voting. 34) Government's ability to reduce private-sector economic risks through laws and 34) regulations would encourage all of the following, except A) reduction of private goods and services. B) introduction of new products and processes. C) formation of new businesses. D) higher levels of private economic investment. 35) The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by 35) A) 10 percent and quantity supplied remains the same. B) 5 percent and quantity supplied rises by 7 percent. C) 8 percent and quantity supplied rises by 8 percent. D) 7 percent and quantity supplied rises by 5 percent. 36) Answer the question based on the following table, which shows a demand schedule. 36) Price Quantity Demanded $5 10 4 13 3 15 2 19 25 The largest decline in total revenue will occur when price falls from A) $2 to $1. B) $3 to $2. C) $4 to $3. D) $5 to $4. 37) The price elasticity of demand is a measure of the A) responsiveness of buyers of a good to changes in its price. 37) B) sensitivity of a good's price to changes in demand. C) relationship between price and profitability. D) effect of changes in demand on the price. 11