Chapter 9

Question 1

An approach to financing public goods in which individuals honestly reveal their willingness to pay, and the government charges them that amount to finance the public good.

Answer 1

Lindahl Pricing

Question 2

The amount that individuals are willing to pay for the next unit of a good.

Answer 2

Marginal Willingness to Pay

Question 3

Taxation in which individuals are taxed for a public good according to their valuation of the benefit they receive from that good.

Answer 3

Benefit Taxation

Question 4

A measure placed on the ballot by the government allowing citizens to vote on state laws or constitutional amendments that have already been passed by the state legislature.

Answer 4

Referendum

Question 5

The placement of legislation on the ballot by citizens.

Answer 5

Voter Initiative

Question 6

The typical mechanism used to aggregate individual votes into a social decision, whereby individual policy options are put to a vote, and the option that receives the majority of votes is chosen.

Answer 6

Majority Voting

Question 7

There is no social decision (voting) rule that converts individual preferences into a consistent aggregate decision without either (a) restricting preferences or (b) imposing a dictatorship.

Answer 7

Arrow’s Impossibility Theorem

Question 8

Preferences with only a single local maximum, or peak, so that utility falls as choices move away in any direction from that peak.

Answer 8

Single-Peaked Preferences

Question 9

Majority voting will yield the outcome preferred by the median voter if preferences are single-peaked.

Answer 9

Median Voter Theorem

Question 10

The voter whose tastes are in the middle of the set of voters.

Answer 10

Median Voter

Question 11

The expending of resources by certain individuals or groups in an attempt to influence a politician.

Answer 11

Lobbying

Question 12

A school of though emphasizing that the government may not act to maximize the well-being of its citizens.

Answer 12

Public Choice Theory

Question 13

The inability or unwillingness of the government to act primarily in the interest of its citizens.

Answer 13

Government Failure

Question 14

Organizations of civil servants, such as the U.S. Department of Education or a town’s Department of Public Works, that are in charge of carrying out the services of government.

Answer 14

Bureaucracies

Question 15

A market in which, because of the uniformly decreasing marginal cost of production, there is a cost advantage to have only one firm provide the good to all consumers in a market.

Answer 15

Natural Monopoly

Question 16

An approach through which the government retains responsibility for providing a good or service but hires private-sector firms to actually provide the good or service.

Answer 16

Contracting Out

Question 17

The abuse of power by government officials in order to maximize their own personal wealth or that of their associates.

Answer 17

Corruption