Economics for Public Policy
Chapter Exam Questions
Course Introduction
Economics for Public Policy introduces students to the fundamental principles of microeconomics and macroeconomics as they apply to government decision-making and public sector challenges. The course explores how economic theories and analytical tools can inform policy design, implementation, and evaluation to address issues such as market failure, public goods, externalities, taxation, inequality, and economic growth. Emphasis is placed on understanding how governments allocate resources, regulate markets, and intervene to promote social welfare, alongside critical examination of policy trade-offs, unintended consequences, and empirical evidence.
Recommended Textbook
Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson
Available Study Resources on Quizplus
17 Chapters
558 Verified Questions
558 Flashcards
Source URL: https://quizplus.com/study-set/404
Page 2
Chapter 1: Economic Models
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/7056
Sample Questions
Q1) If \(Y = X ^ { 2 } + Z ^ { 2 }\) ,the contour lines.
A)are concentric circles.
B)are parabolas.
C)are hyperbolas.
D)intersect whenever either X or Z is zero.
Answer: A
Q2) Suppose \(Q _ { D } = - 5 P + 44\) and \(Q _ { s } = P - 4\) .The equilibrium quantity is
A)2
B)3
C)4
D)5
Answer: C
Q3) Suppose \(Q _ { D } = - 5 P + 44\) and \(Q _ { s } = P - 4\) .The equilibrium price is. A)7
B)8 C)9
D)10
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Utility and Choice
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/7057
Sample Questions
Q1) If a person's indifference curves can be represented as a straight line,the person views the goods as
A)perfect substitutes
B)perfect complements
C)complements (but not perfect)
D)substitutes (but not perfect)
Answer: A
Q2) Indifference curves
A)are nonintersecting.
B)are contour lines of a utility function.
C)are negatively sloped.
D)All of the above.
Answer: D
Q3) If the price of X falls,the budget constraint
A)shifts outward in a parallel fashion.
B)shifts inward in a parallel fashion.
C)rotates outward about the X-intercept.
D)rotates outward about the Y-intercept.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Demand Curves
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/7058
Sample Questions
Q1) Suppose \(U = \min ( X , Y )\) and the price of X is 1,the price of Y is 1 and income is $12.If the price of X increases to 2,the substitution effect is
A)2
B)-1
C)0
D)-2
Answer: C
Q2) If good X is a normal good and its price rises,then quantity demanded
A)may or may not fall.
B)will always fall.
C)will always rise.
D)will remain unchanged.
Answer: B
Q3) The lump sum principle suggests that the tax that reduces utility the least is A)a tax on income
B)a tax on a good with many substitutes
C)an equal tax per-unit on all goods
D)a tax on a good with only a few substitutes
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Uncertainty
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/7059
Sample Questions
Q1) People who choose not to participate in fair gambles are called
A)risk takers.
B)risk averse.
C)risk neutral.
D)broke.
Q2) Expected value is defined as
A)the profit on a fair bet.
B)the most likely outcome of a given experiment.
C)the outcome that will occur on average for a given experiment.
D)the relative frequency with which an event will occur.
Q3) A gamble can be described as "fair" if the expected value of the gamble (including any costs of play)is
A)positive.
B)zero.
C)negative.
D)one.
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Game Theory
Available Study Resources on Quizplus for this Chatper
23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/7060
Sample Questions
Q1) The beauty of Nash's equilibrium concept is that
A)all games have one.
B)all games have no more than one.
C)all games have a rich set to choose from.
D)it is a Pareto optimum.
Q2) Return to the version of the game between the fishermen in which they fish independently. If the marginal cost for just fisherman A went up,what would be the likely effect on the Nash equilibrium?
A)A would catch more fish,and B would catch fewer.
B)A would catch fewer fish,and B would catch more.
C)A would catch more fish,but B's catch would not change.
D)A would catch fewer fish,but B's catch would not change.
Q3) A subgame-perfect equilibrium is a Nash equilibrium that
A)cannot persist through several periods.
B)involves only credible threats.
C)consists only of dominant strategies.
D)is unique.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Production
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/7061
Sample Questions
Q1) If,as a result of doubling all its inputs,a firm can more than double its output,the firm's production function exhibits
A)constant returns to scale.
B)increasing returns to scale.
C)decreasing returns to scale.
D)increasing marginal productivity to at least one input.
Q2) A production function measures how an individual maximizes utility.
A)a firm transforms output into input.
B)a firm transforms inputs into output.
C)a firm minimizes cost.
Q3) If Q = K<sup>2</sup>L<sup>2</sup> the MP<sub>K</sub> is A)constant
B)diminishing
C)increasing
Q4) If Q = K<sup>1/3</sup>L<sup>2</sup> the MP<sub>K</sub> is A)constant
B)diminishing
C)increasing
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Costs
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/7062
Sample Questions
Q1) Short-run total cost is the sum of
A)short-run fixed cost,short-run variable cost,and short-run marginal costs.
B)short-run fixed cost and short-run marginal costs.
C)short-run variable cost and short-run costs.
D)short-run fixed cost and short-run variable cost.
Q2) The firm's expansion path records
A)profit-maximizing output choices for every possible price.
B)cost-minimizing input choices for all possible output levels for when input prices expand along with production.
C)cost-minimizing input choices for all possible output levels for a fixed set of input prices.
D)cost-minimizing input choices for profit-maximizing output levels.
Q3) The accountant's cost of producing a bicycle refers to
A)the out-of-pocket payments made to produce the bicycle.
B)the value of the goods that were given up to produce the bicycle.
C)the bicycle's retail price.
D)the marginal cost of the last bicycle produced.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Profit Maximization and Supply
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/7063
Sample Questions
Q1) If the demand faced by a firm is elastic,selling one less unit of output will
A)increase revenue.
B)decrease revenue.
C)keep revenues constant.
D)decrease price.
Q2) An unregulated electric company is a monopolist and faces demand of Q = 50 - 10P. If the company has zero marginal costs,its profit-maximizing price is A)0
B)1
C)2.5
D)5
Q3) If a firm's marginal revenue is below its marginal cost,an increase in production will usually
A)increase profits.
B)leave profits unchanged.
C)decrease profits.
D)increase marginal revenue.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Perfect Competition in a Single Market
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/7064
Sample Questions
Q1) Suppose demand for a good is Q<sub>D</sub> = 100 - P and supply is Q<sub>S</sub> = -20 + P.Suppose that a nationwide quota (of 20)is enforced so that more can be used in a war effort.What is the consumer surplus?
A)200
B)400
C)600
D)800
Q2) Suppose demand for a good is Q<sub>D</sub> = 100 - P and supply is Q<sub>S</sub> = -20 + P.What is the amount consumers pay producers?
A)60
B)2400
C)3600
D)6400
Q3) In the very short run
A)new firms may enter the industry.
B)existing firms may change the quantity they are supplying.
C)price and quantity supplied is absolutely fixed.
D)quantity supplied is absolutely fixed.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: General Equilibrium and Welfare
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/7065
Sample Questions
Q1) Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 coffee per 1 unit cream)are invited to a weekend long event (during which they can easily consume 8 cups of coffee).Suppose Snob A is given 8 units of cream and Snob B is given 80 units of coffee.The post trading result (one in which any trade that makes both parties better off than their initial allocation)will guarantee each person
A)nothing
B)at least 1 cup of properly made coffee.
C)at least 2 cups of properly made coffee.
D)exactly 4 cups of properly made coffee.
Q2) The reason externalities distort the allocation of resources is that
A)too few goods are usually produced.
B)firms often go out of business because of the externality.
C)a firm's private costs do not reflect the social cost of production.
D)regulating externalities uses scarce resources.
Q3) Markets can fail to achieve efficiency when
A)there are prices consumers do not think are fair.
B)there are wages workers do not think are fair.
C)trade puts people out of work.
D)there are markets with imperfect competition.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Monopoly
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/7066
Sample Questions
Q1) A monopolist has total cost TC = .1Q<sup>2</sup> - 2Q + 100 and marginal cost MC = .2Q - 2. Market demand is Q = 86 - P,implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is
A)92
B)46
C)40
D)20
Q2) Consider the same monopoly situation as in the previous question.The firm's profit will be
A)1,760
B)1,660
C)2,264
D)6,728
Q3) Consider the same monopoly situation as in the previous question. The monopoly price is
A)8
B)46 C)54
D)92
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Imperfect Competition
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/7067
Sample Questions
Q1) In a Cournot equilibrium,each firm chooses an output level that
A)maximizes joint profits.
B)maximizes the price received.
C)maximizes profits given what the other firm produces.
D)maximizes revenue given what the other firm produces.
Q2) Consider the same market for nonalcoholic beer as in the previous question. How many "units" of beer will Cudweiser produce?
A)667
B)1,667
C)2,333
D)3,000
Q3) Consider the market for nonalcoholic beers from the previous question.Which of the following is the best-response function for Boors from the Bertrand game?
A)PB = -2.5 + .05PC
B)PB = 2.5 + .05PC
C)PC = 2.5 - .05PB
D)PB = 2.5 - .15PC
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Pricing in Input Markets
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/7068
Sample Questions
Q1) A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because
A)it would not be maximizing output.
B)it would not be maximizing the productivity of labor.
C)it would not be minimizing costs.
D)it would not be maximizing profits.
Q2) Suppose the market for labor is perfectly competitive and the demand for labor is \(L = 100 - 10 w\) and market supply is \(L = - 20 + 10 w\) .The equilibrium number of workers hired will be
A)30
B)40
C)50
D)60
Q3) The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant
A)the greater the change in output.
B)the more sharply curved are the firm's isoquants.
C)the flatter are the firm's isoquants.
D)the larger the quantity of labor employed.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Capital and Time
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/7069
Sample Questions
Q1) The difference in present value between a perpetuity that promised $1 per year starting today and one that promised $1 per year starting next year is
A)0.
B)$1.
C)$1/(1 + r).
D)$r/(1 + r).
Q2) The annual rental rate for a machine is
A)the yearly depreciation and maintenance costs for the machine.
B)the yearly interest costs associated with owning the machine.
C)the initial purchase price of the machine divided by the number of years the machine is expected to last.
D)the sum of the yearly depreciation,maintenance,and interest costs associated with owning the machine.
Q3) If real extraction costs do not change,the relative price of a finite resource would be expected to
A)fall over time.
B)remain constant over time.
C)rise at a rate given by the nominal rate of interest.
D)rise at a rate given by the real rate of interest.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Asymmetric Information
Available Study Resources on Quizplus for this Chatper
28 Verified Questions
28 Flashcards
Source URL: https://quizplus.com/quiz/7070
Sample Questions
Q1) Given a series of contracts offered to an executive having the same slope (where slope refers to how the contract varies with changes in the firm's gross profits)but different intercepts (referring to the overall generosity of the contract). Which of these is not a consideration in figuring out which of these intercepts the shareholders would decide to build into the contract offered to the executive?
A)if too generous a contract is offered,this comes out of the firm's bottom-line profit.
B)if too generous a contract is offered,the executive may become lazy and not exert the required effort.
C)if the contract isn't generous enough,the executive will decide to work elsewhere.
D)if the contract isn't generous enough,only low-ability executives will apply.
Q2) Suppose that your personal valuation for a painting is $200. Which auction format would induce you to bid more?
A)First price.
B)Second price.
C)You would bid the same in any format.
D)Depends on the environment.
To view all questions and flashcards with answers, click on the resource link above.
17
Chapter 16: Externalities and Public Goods
Available Study Resources on Quizplus for this Chatper
34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/7071
Sample Questions
Q1) In drilling a new oil well in an existing oil field,the fact that output on existing wells is reduced means that
A)existing wells have negatively sloped marginal cost curves.
B)existing wells and new wells are owned by different people.
C)existing wells and new wells are owned by the same people.
D)there is a discrepancy between private and social marginal costs.
Q2) Suppose the market for oranges is perfectly competitive and unregulated.Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges.Suppose Q<sub>D</sub> = 1000 - 100P and Q<sub>S</sub> = -100 + 100P.If regulators limited production to 200 bushels,the deadweight loss relative to the option of setting the optimal tax would be would be
A)$0
B)$200
C)$500
D)$1000
Q3) Left to their own,private markets tend to
A)under-allocate resources to public goods.
B)allocate the economically efficient amount of resources to public goods.
C)over-allocate resources to public goods.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Behavioral Economics
Available Study Resources on Quizplus for this Chatper
23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/7072
Sample Questions
Q1) Return to the market for cigarettes from the previous question. What per-unit tax could the government levy to eliminate the deadweight loss from the behavioral bias?
A)0
B)1
C)50
D)100
Q2) Return to the case of Jan,the hyperbolic discounter from the previous question. What values of B and C will lead her to be consistent with a plan to undertake the action?
A)C < B < 2C.
B)B < C.
C)B > 2C.
D)B < C < 2B.
Q3) Limits to self-interested payoff maximization that have been studied by behavioral economists include
A)limited cognitive ability.
B)limited willpower.
C)limits to self interest.
D)all of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 19