31) People respond to incentives A) by ignoring negative incentives and responding to positive incentives only. B) only when they are irrational. C) by calculating their individual costs and benefits and determining which is greater. D) when they have low incomes.
31) People respond to incentives
A) by ignoring negative incentives and responding to positive incentives only.
B) only when they are irrational.
C) by calculating their individual costs and benefits and determining which is greater.
D) when they have low incomes.
32) The threat of a large fine for failure to pay income taxes is an example of
A) the excessive power of the Internal Revenue Service.
B) the ineffectiveness of incentives to get people to pay their taxes.
C) a negative incentive to get all people to pay taxes.
D) people failing to consider all the benefits the government provides them.
33) A politician says that the government should tax behavior they want less of and subsidize behavior they want more of. This is an example of
A) cynical behavior in modern democracies.
B) failing to consider the alternatives available to the government.
C) a concern that people are not rational when they make decisions.
D) using incentives to alter behavior.
34) Which of the following ways to recruit soldiers utilizes incentives?
A) a draft
B) universal service
C) higher salaries
D) longer lengths of service
35) Self-interest
A) implies that a person must try to increase wealth at all times.
B) implies that people will not give away wealth.
C) is consistent with many goals that people pursue, including betterment of others.
D) applies only to people in market settings.
36) Self-interest
A) relates strictly to material well-being, such as a person's stock of wealth at a point in time.
B) is measured entirely based on an individual's income, whether earned from labor or inherited.
C) is inconsistent with economic analysis, which suggests that self-interest is irrational.
D) can involve any action that makes a person feel better off, such as charitable contributions.
37) Shelley's grandmother gave her a sweater for her birthday, but Shelley wanted a DVD. This implies that
A) Shelley's grandmother is not acting out of self-interest because she knows that Shelley really wanted a DVD.
B) Shelley's grandmother is acting out of self-interest because she wanted to give Shelley something useful.
C) it is in Shelley's self-interest to refuse to wear the sweater.
D) Shelley should exchange the sweater for a DVD.
38) Charitable donations to the Red Cross
A) can be explained by the rational ignorance theory.
B) can be explained by the rational self-interest theory.
C) cannot be explained by the rational self-interest theory.
D) prove that there is no scarcity in the United States.
39) A five-cent deposit on beer bottles
A) provides a positive incentive because it rewards people for recycling.
B) provides a negative incentive because it punishes people who do not recycle.
C) is an irrational policy, because it fails to take into account incentives.
D) is an irrational policy, because it fails to take into account self-interest.
40) If a teacher tells a student that those who attend the study session typically score higher on the final exam,
A) the student has a positive incentive to attend the study session because she may get a higher grade.
B) the student has a negative incentive to attend the study session because she will be punished if she does not go.
C) the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam.
D) a "C" student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go.
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