Regulation Multiple Choice Question Answers

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1. An advantage of using the market rather than a regulatory institution to regulate activity is

1. knowledge is dispersed throughout the economy and cannot be available all at once to regulators
2. it achieves a productive division of labor that could not be achieve without it
3. the market always results in cheaper products
4. all of the above
5. a and b of the above

1. Given the existence of scarcity, we must make choices; we cannot have more of everything.  Economists express this idea by saying that there are __________

1. challenge
2. gift
3. trade offs
4. free lunch
5. a brick wall

1. The opportunity cost of any action is

1. the expense incurred in doing it
2. the value of the best alternative sacrificed
3. the benefit ratio
4. the time and effort it requires
5. none of the above

1. In the cases we have discussed we have learned that policies have _______________, and that their net benefits are almost always _______.

1. intended consequences, more than anticipated
2. unintended consequences, less than anticipated
3. unintended consequences , average out about equal to what was anticipated
4. all of the above are true.

1. The problem associated with airbags in cars can best be described as on of

1. Excessive costs
2. Insufficient benefits
3. Unintended consequences
4. Inefficient implementation.

1. Cars that are equipped with airbags tend to be driven

1. by more responsible people
2. more aggressively
3. less aggressively
4. by teenagers

1. A Type II error occurs

1. when the FDA approves an unsafe or ineffective drug
2. when the FDA delays the introduction of a safe drug
3. when the FDA approves a drug that is too expensive
4. when people make bad choices

1. Which of the following episodes is associated with Type II errors by the FDA?

1. the AIDS epidemic
2. benzene consumption
3. the thalidomide scare
4. cocaine use
5. b and c of the above

1. The problem involved in implementing any kind of regulation is

1. the difficulty of knowing how much additional benefit is achieved from the regulation
2. the difficulty of knowing how much additional regulation costs
3. the difficulty of knowing how much consumers value each additional increment of regulation
4. all of the above

1. According to our text the criminalizing of the use of certain substances has resulted in the use of ________ forms

1. more potent
2. less potent
3. less attractive
4. none of the above

1. Decriminalizing prostitution would most likely result in  __________ in the spread of sexually transmitted diseases

1. an increase
2. a decrease
3. no change
4. first a decrease then an increase.

1. Victimless crimes are distinguished by the fact that

1. the victims all die
2. the victims don’t know they are victims
3. the victims have no incentive to reveal the crime
4. they cost more

1. Increasing the minimum wage would most likely

a.        decrease unemployment

b.       increase unemployment

c.        increase everyone’s living standards

d.       b and c of the above

e.        a and c of the above

1. Decriminalizing prostitution would most likely result in ________ in the price of the service

1. an increase
2. a decrease
3. no effect
4. a then b
5. it is impossible to tell

15.     Imposing a rent ceiling above the market rate would

a.        decrease housing

b.       increase housing

c.        cause housing to become run down

d.       have no effect

e.        a and c of the above

1. Which of the following is most likely to support the raising of minimum wages?

a.        organized labor

b.       teenagers

c.        generous employers

d.       all of the above

e.        a and c of the above

1. Successive decreases in expenditure on airline safety would decrease the degree of safety at

a.        an increasing rate

b.       a decreasing rate

c.        a constant rate

d.       a variable rate

1. A per unit excise tax will always be shared by the buyer and the seller as long as

a.        the demand curve is not vertical

b.       the supply curve is not vertical

c.        both of the above

d.       none of the above

1. The elasticity of demand for water in the U. S. is

a.        zero

b.       infinite

c.        quite high

d.       non-existent

1. To maximize the benefits of law enforcement expenditure one should try and ensure a balance between

a.        the probability of being apprehended and the probability of being charged

b.       the probability of being charged and the probability of being convicted