Economics and Public Policy Exam 1

Question 1

What are the three types of institutions?

Answer 1

a. Government
b. For-profit
c. Non-profit

Question 2

What is the goal of Government?

Answer 2

To provide services for its units of Jurisdiction and pay for those services by raising revenue, usually though taxation.

Question 3

What is the goal of a for-profit?

Answer 3

It operates to earn a profit for their owners. They perform an activity or service in hope that the revenues generate by doing business exceed the cost.

Question 4

What is the goal a non-profit?

Answer 4

It is not operated for the purpose of earning profit. They are exempt from state and federal tax.

Question 5

What are the steps of the Public Policy Process?

Answer 5

1. Identify the social goal.
2. Diagnose the problem.
3. Identify the appropriate institution for action.
4. Evaluate the substance and politics of the competing policy options.
5. Implement, enforce, and monitor the policy change,

Question 6

What is scarcity?

Answer 6

When the demand for a good and service is greater than the availability of the good and services; creating a limit on the choices.

Question 7

What are the four uncertainties?

Answer 7

1. Scientific uncertainty.
2. Human unpredictability.
3. Deliberately hidden information.
4. The sheer complexity of life.

Question 8

What is a collective action problem?

Answer 8

When members of a group are unable or willing to organize themselves in a way that would make them better off in the long run.

Question 9

What is supply and demand/

Answer 9

The prices of goods are determined by the relationship between the supply and demand. When a good is not really, demanded then the price of it wont be dramatically changed.

Question 10

What is an opportunity cost?

Answer 10

What is given up in order for you to get what you want.

Question 11

What are incentives?

Answer 11

The benefits or costs of an action that influences decisions and behaviors. They motivate and explain the ranges of human behavior.

Question 12

What are principle agent problems?

Answer 12

It occurs when one party expects another party withe different motivations to act in a way that is consistent with the principals, goals, and objectives.
There are two basic characteristics:
1) the principle hires an agent to do some specific tasks; the agent has an incentive to behave in ways that are not consistent with principals interests.
2) The principals cannot easily monitor agents behaviors.

Question 13

What are positive or negative externalities?

Question 14

What is a fact?

Answer 14

An objective reality or truth, informed by observations, measurements, or calculations.

Question 15

What is a theory?

Answer 15

A general principle supported by data or analytics.

Question 16

What does it mean to maximize your profits?

Answer 16

When firms organize their resources and make other decisions to make as much money as possible for the owners of the firms.

Question 17

What are the different types of incentives?

Answer 17

1. Economic/ financial
2. Commodities (goods and services)
3. Social/ cultural.

Question 18

What are property rights?

Answer 18

A legal right to exercise control over some resources. Involves control over literal property. Also it defines what allowable behaviors of firms and individuals in relation to the right of other firms and individuals.

Question 19

What are transaction costs?

Answer 19

The cost of doing business. Collectively, the cost of conducting a transaction.

Question 20

What are the results of a zero-sum game?

Answer 20

Has a fixed pay off: if one player gets more, then other players must get less.

Question 21

What is a negative sum game?

Answer 21

Has a smaller payoff as time goes on; participants are competing for shares of a shrinking pie.

Question 22

What is a positive sum game?

Answer 22

Has a payoff larger under some circumstances; the participants can increase the size of the pie.

Question 23

The Covid-19 Pandemic caused…

Answer 23

1. A negative Externality
2. Scarcity
3. Collective action Problem

Question 24

The Affirmative Action Ruling was an example of public policy being impacted by what branch of government?

Question 25

What are the economic impacts of the student loan debt program ruling?

Answer 25

1. Less Money for the average family
2. College Enrollment Decreases

Question 26

The Ukraine War would be considered what type of problem for the country?

Answer 26

Collective action problem

Question 27

How can a government shutdown impact the economy?

Answer 27

1. Halts social services.
2. No paychecks for government workers,