Question 31(1 point)

Which of the following statements is true?

a

The Principal-agent problem refers to conflicts that arise when tasks are delegated by one group of people (agents) to another group (principal).

b

Special-interest effect refers to any outcome of the political process whereby a small number of people obtain a government program or policy that gives them large gains at the expense of a much greater number of persons who individually suffer small losses.

c

The appeal to government for special benefits at taxpayers' expense is called rent-seeking.

d

All of the above.

e

Only b) and c)

Question 32(1 point)

Which of the following statements is true?

a

A demand-side market failure occurs when a firm does not pay the full cost of producing its output (which includes "extra" costs). That is, the external ("extra") costs of producing the good are not reflected in the supply of the good.

b

When there aren't any market failures (that is, when demand fully reflects consumers' willingness to pay and supply reflects all costs of production), the market equilibrium is efficient.

c

An efficient market produces the amount of output that society desires, and maximizes the benefits to both consumers and producers.

d

All of the above.

e

Only b) and c)

Question 33(1 point)

Which of the following statements is true?

a

A government creates an unfunded liability when it commits to making a series of future expenditures without simultaneously committing to collect enough tax revenues to pay for those expenditures.

b

The government collects Social Security taxes to help defray the expected future costs of the program (Social Security and Medicare), but the current tax rates will not generate nearly enough revenue to pay for all of the expected outlays.

c

A government runs an annual budget deficit when its spending is less than its tax revenues during a particular year.

d

All of the above.

e

Only a) and b)