Chapter 13: test bank some answers and Comments on the Text Discussion Questions



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chapter 13: test bank

SOME Answers and Comments on the Text Discussion Questions

1. National defense is undoubtedly a better example of a public good than crime prevention. It very clearly has the characteristics of a public good. It is indivisible, nonrivalrous, and nonexcludable.


2. If a public good is sold in the market, people who do not pay for the good cannot be excluded from using it.
3. If a good is indivisible, it cannot be divided into small, manageable units to be sold on the market. If a good is nonrivalrous, one person’s receiving benefits from it does not preclude others from using it. If a good is nonexcludable, persons who do not pay for it cannot be prevented from using it, so there will be free riders.
4. The benefits of crime prevention are the lack of injuries and damages from crimes that do not occur, so they are really cost savings. Cost expenditures are both direct and indirect. There is the cost of the police department, and there are also the costs of businesses and households in complying with laws and regulations. Not all benefits or costs are easily quantifiable. How do you measure and put a dollar value on the trauma of a rape victim or the loss of individual freedom from random drug searches?


  1. If demand is inelastic, legalization will result in smaller increases in usage than if it is more elastic.

6. Taxes decrease supply and therefore usage.


7. Of course.

SUGGESTED TEST QESTIONS


Multiple-Choice Questions
1. Which of the following is an example of a pure public good?

    1. education.

    2. a municipal hospital.

    3. national defense.

    4. CD players.

2. A neighborhood group initiates a “neighborhood watch” program. Ella doesn’t take part in the program, but she enjoys the greater security the program provides. Ella is a:



  1. smart consumer.

  2. free rider.

  3. busy person.

  4. poor citizen.

3. Some characteristics of a public good are that it is:



  1. indivisible.

  2. nonrivalrous.

  3. nonexcludable.

  4. all of the above.




  1. A so-called victimless crime is one that is:

  1. not particularly violent.

  2. only against property.

  3. the result of consensual dealings between responsible persons.

  4. the result of coercion of a weaker person by a stronger one.




  1. Which of the following is often considered a victimless crime?

  1. pornography.

  2. arson.

  3. rape.

  4. murder.

6. The best way of evaluating crime prevention programs from an economic perspective is to look at their:



  1. deterrent effects.

  2. benefits and costs.

  3. number of prosecutions.

  4. popularity with the public.

7. Legalization of drugs would ________ the supply of drugs in the market.



  1. increase.

  2. decrease.

  3. not change.

  4. shift backwards.

8. Legalization of drugs would ________ the demand for drugs in the market.



  1. increase.

  2. decrease.

  3. not change.

  4. shift backwards.

9. If the government were to tax legalized drugs, it would:



  1. increase their supply and decrease price.

  2. increase their supply and increase price.

  3. decrease their supply and increase price.

  4. decrease their supply and decrease price.

10. If the government were to legalize drugs, their usage would:



  1. not change.

  2. decrease.

  3. increase.

  4. not change, but the price would go down.

11. An economic argument against the legalization of drugs is:



    1. legalization would make drugs more easily obtainable by young children.

    2. legalization would increase drug usage, which would have adverse public health consequences.

    3. the War on Drugs is succeeding in keeping most illegal drugs out of the U.S.

    4. more crimes would be committed by users since the price of drugs would increase and drugs would be less affordable.

12. An economic argument for the legalization of drugs is:



  1. drugs would no longer be as profitable for organized crime.

  2. drug usage would decrease.

  3. legalization would decrease the overall demand for drugs, since many drug users are people who just like the forbidden.

  4. legalization would decrease the supply of drugs more effectively than the War on Drugs has.

13. The usage of now illegal drugs would increase less if they were legalized if their demand is:



  1. horizontal.

  2. elastic.

  3. inelastic.

  4. none of the above.

14. Drug addicts are likely to have a highly _________ demand, while recreational users are likely to have a more _________ demand.



  1. elastic, inelastic.

  2. inelastic, elastic.

  3. flat, steep.

  4. direct, inverse.

15. Which of the following movements on the production possibilities graph might represent changes in U.S. choices between crime prevention and other goods and services in the past quarter century?





  1. From A to B.

  2. From B to A.

  3. From C to D.

  4. From D to C.




  1. Expenditures on which of the following have increased most?

  1. courts

  2. police activities

  3. prisons

  4. after school programs for juveniles




  1. An argument for legalization of drugs is that legalization would:

  1. decrease usage of drugs.

  2. free with prison space for criminals who commit violent crimes.

  3. increase the price of drugs.

  4. all of the above.




  1. An argument against the legalization of drugs is that:

a. the War on Drugs has been working to decrease drug usage.

b. legalization would increase the profits of organized crime.

c. taxing legalized drugs is immoral.

d. we would have unused prison capacity.




  1. Among the reasons that U.S. incarceration rates have increased in recent years are:

  1. mandatory sentences for drug offenders.

  2. “three strikes and you’re out” legislation in some states.

  3. “truth in sentencing” laws.

  4. all of the above.




  1. Over half of our expenditures on the War on Drugs is spent on:

  1. programs to educate young people about the dangers of drug use.

  2. programs to decrease the supply of drugs.

  3. programs to decrease the demand for drugs.

  4. increasing prison capacity.


True-and-False Questions
F 1. The War on Drugs is universally thought to be a success.
F 2. Statistics show that crime rates have increased in recent years.
T 3. Expenditures on the criminal justice system have increased more than inflation in the past twenty years.
T 4. The largest increase in spending on the criminal justice system since the 1970s is in the area of corrections.
F 5. The largest increase in spending on the criminal justice system since the 1970s is in the area of police protection.
F 6. Theft is usually considered a victimless crime.
F 7. Most of the individuals in jail on drug charges are members of organized crime syndicates.
T 8. Economists argue that crime prevention activities should be evaluated by benefit/cost analysis.
T 9. Expenditures on the criminal justice system are an increasingly large percentage of state budgets over time.
F 10. Expenditures on the criminal justice system have no effect on expenditures on education.
T 11. “Truth in Sentencing” laws result in prisoners serving longer prison sentences before being eligible for parole.
F 12. The U.S. incarceration rate is not high by international standards.
T 13. One reason the U.S. incarceration rate has increased is that many people believe that prisons are a deterrent to crime.
F 14. State expenditures on education have increased far more rapidly than state expenditures on prisons in the last 20 years.
T 15. “Three strikes and you’re out” laws require life sentences after three convictions for certain serious crimes.
T 16. The so-called victimless crimes are the result of consensual transactions between rational persons.
F 17. It is impossible to be simultaneously a social liberal and an economic conservative with regards to the so-called victimless crimes.
T 18. Economic conservatives are more likely to favor the legalization of drugs than are economic liberals.
T 19. All costs of crime prevention activities are not easy to quantify.
F 20. Economists agree that it is efficient to spend any amount on crime prevention activities so long as we decrease the crime rate by doing so.

Short-Answer Questions
1. On the graph of the market for marijuana below, show the shifts of demand and supply from legalizing marijuana. What would happen to usage? _____________ , to price? _____________





  1. Which of the demand curves below is likely to be the demand curve of a casual drug user and which is likely to be the demand curve of an addict? ________ In which case below would legalization result in the greatest increase in usage? ________







  1. Draw the shift that will occur in the following market for marijuana if the government imposes a per bag tax on marijuana sales. What is the effect on the equilibrium price of marijuana? _____________ , on the equilibrium quantity bought and sold? ______________






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