Business Regulation Exam

1.

Which of the following is an accurate statement?

Student Response Correct Answer Feedback

A. economic freedom is necessary for political freedom

B. political freedom is necessary for economic freedom

C. both of the above

D. none of the above

General Feedback: As argued by Friedman, economic freedom is necessary for political freedom - because political processes require resources. Though they often go together, economic freedom does not require political freedom.

Score: 0/1

2.

Which of the following is an accurate statement?

Student Response Correct Answer Feedback

A. prosperity depends on democracy

B. prosperity depends on free trade

C. both of the above

D. none of the above

General Feedback: History teaches us that prosperity depends on trade. The same cannot be said for democracy.

Score: 0/1

3.

Consider the following statement: Regulatory outcomes are strongly influenced by the personal costs and benefits facing the regulators. This statement is consistent with which of the following approaches to regulation theory?

Student Response Correct Answer Feedback

A. the public choice approach

B. the public interest approach

C. the public welfare approach

D. all of the above

E. none of the above

General Feedback: This is a definitional matter. We used primarily the Public Choice Approach.

Score: 1/1

4.

Relaxing the standards by which the FDA decides whether a drug is safe or not will result in which of the following?

Student Response Correct Answer Feedback

A. a decrease in Type I errors

B. an increase in Type I errors

C. an increase in Type II errors

D. a and b of the above

E. b and c of the above

General Feedback: Should be clear from the definitionof type I errors in this context

Score: 0/1

5.

In our current system of criminal justice, which of the following is a Type I error?

Student Response Correct Answer Feedback

A. acquitting a guilty person

B. convicting a guilty person

C. acquitting an innocent person

D. convicting an innocent person

Score: 1/1

6.

Which of the following is most likely true? At current levels of expenditure, the marginal costs ____________ the marginal benefits of airline safety.

Student Response Correct Answer Feedback

A. exceeds

B. fall short of

C. is equal to

D. cannot be compared to

Score: 1/1

7.

Every regulatory policy must deal with which of the following problems?

Student Response Correct Answer Feedback

A. the knowledge problem

B. the incentive problem

C. both of the above

D. none of the above

Score: 1/1

8.

In which of the following did regulation sometimes cause exactly the consequence it wished to avoid by the regulation?

Student Response Correct Answer Feedback

A. mandating additional airline safety checks

B. mandating additional airline security measures

C. requiring all cars to have passenger airbags installed

D. allowing the FDA to fast track the approval of some drugs

Score: 0/1

9.

Which of the following policies will have no effect?

Student Response Correct Answer Feedback

A. the setting of a minimum wage below the market wage

B. the setting of a maximum rent above the market rent

C. both of the above

D. none of the above both will have effects.

Score: 1/1

10.

Which of the following are the most likely supporters of minimum wage laws?

Student Response Correct Answer Feedback

A.