When compared with other governments around the world, government spending in the United States as a percentage of GDP_____.

a. is generally lower than similar countries

b. is generally higher than similar countries

c. is about average relative to similar countries

d. is impossible to compute because of differences between countries

The individuals budget constraint is _____.

a. the amount of money she has in the bank

b. determined by dividing the individuals income by the price of the goods she wants to buy

c. the maximum amount one good she can consume given her consumption of other goods

d. a line depicting all the possible budgets an individual could have at various occupations

Which of these actions will occur to the budget constraint when an individuals income increases?

a. shifts outward

b. shifts backward

c. rotates clockwise

d. cannot be determined from the information given

The utility maximizing consumption bundle for an individual can be found by locating _____.

a. the individuals bliss point

b. any point on an indifference curve touching the budget constraint

c. the highest point on an individuals indifference curve

d. the point tangent to an individuals budget constraint

The market system is based upon _____.

a. money

b. voluntary exchange

c. capitalism

d. profits

_____ a cornerstone of the market economy.

a. Mutually beneficial exchange is

b. A strong central bank

c. Monopoly rents are

d. Government regulation is

As long as the value of additional units of output exceed the opportunity cost of that output, _____.

a. it will not be produced

b. it likely will not be produced

c. it will be produced

d. it is likely to be produced

The subject matter of public economics falls into the two general categories of _____ and _____.

a. public interest; private interest

b. coercion action; individual liberty

c. revenue generation; government spending

d. civilian activities; military duties

The market system is able to allocate resources efficiently because individuals have the right to the output they produce and _____.

a. freedom of the press

b. freedom of speech

c. freedom of movement

d. freedom of exchange

Government institutions that protect the rights of individuals are ______.

a. the executive, legislative, and judicial branches of government

b. federal, state, and local governments

c. federal agencies such as OSHA, FEC, and the FCC

d. police, military branches, and the court system

Employing utilitarianism as a measure of the public interest _____.

a. is inconsistent with the concept of a social welfare function

b. attempts to minimize the problems associated with market failure

c. attempts to maximize total utility in a society

d. avoids comparing individuals utilities

The Pareto optimality concept is _____.

a. equivalent to the concept of economic efficiency

b. equivalent to Pareto superiority

c. equivalent to utilitarianism

d. equivalent to cost-benefit analysis

A property right _____.

a. entails responsibility

b. means you can burn trash in your yard whenever you want

c. is absolute

d. is completely different than the right to free speech

The Coase Theorem states that _____.

a. in the absence of transactions costs, the allocation of resource will be independent of property right assignment

b. in the absence of transactions costs, the allocation of resources will be dependent on property right assignment

c. with transactions costs, the allocation of resources will be independent of property right assignment

d. with transactions costs, the allocation of resources will be dependent of property right assignment

The Coase Theorem implies that _____.

a. absent transactions costs, resources will be efficiently allocated

b. absent transactions costs, resources will be inefficiently allocated

c. with significant transactions costs, resources will be efficiently allocated

d. with significant transactions costs, resources will be inefficiently allocated