G202 EXAM 1 2026/2027 | STUDY GUIDE, PRACTICE
QUESTIONS AND EXAM REVIEW
California can best be described as what type of political issue?
a) Majoritarian issue.
b) Client issue.
c) Entrepreneurial issue.
d) Interest Group issue. - Ans✅✅✅ d) Interest Group issue
For any particular special interest group, lobbying over a specific political issue will
likely be successful
when the issue is classified as
a) a majoritarian issue.
b) a client issue.
c) an interest group issue.
d) an entrepreneurial issue. - Ans✅✅✅ a client issue
The 'special interest effect' refers to the bias of government in favor of policies that
a) support small groups at the expense of large groups.
b) serve national interests, such as national defense.
c) serve consumer interests at the expense of businesses.
d) support large groups at the expense of small groups of business firms. - Ans✅✅✅ support small
groups at the expense of large groups
Based on the Ventria Bioscience case; which of the following was considered to be
part of the potential stakeholder allies of Ventria?
a) World Health Organization.
b) California Secretary of Agriculture.
,c) Friends of the Earth.
d) Anheuser-Busch. - Ans✅✅✅ World Health Organization
Given an industry is producing the socially efficient output level, a tax placed on the
industry will result in inefficiency because the market will produce
a) too many units, as some units produced will have more productive costs than
consumer value.
b) too many units, as some units produced will have more consumer value than
productive costs.
c) too few units, giving up some units that have more consumer value than
productive costs.
d) too few units, giving up some units that have more productive costs than
consumer value. - Ans✅✅✅ c) too few units, giving up on some units that have more consumer value
than productive costs
Based on the Spotify case, how were music piracy sites (like Napster, Gnutella, and
Torrent) able to provide a framework for music swapping?
a) the ownership rights of produced music had never been defined by government
laws and regulations.
b) communal property rights are given to produced music, so everyone has the right
to use the songs that are produced.
c) the typical patent protection given to produced music does not apply to internet
consumers of music.
d) there was no enforcement within the internet of the copyright laws that protect
music producers. - Ans✅✅✅ d) there was no enforcement within the internet of the copyright laws
that protect music preferences
If a firm is earning zero economic profit, it
a) has incentive to shut down and leave the market.
, b) is earning below the normal rate of return.
c) is also earning zero accounting profit.
d) is doing as well as the typical firm of that industry. - Ans✅✅✅ d) is doing as well as the typical firm
of that industry.
Which one of the following
is not one of the benefits of well defined and enforced private property rights?
a) Voluntary exchanges between property owners will occur more frequently.
b) Owners will devote less resources to developing new technology.
c) Owners will have more incentive to use their property to benefit others.
d) Owners will have more incentive to maintain the resources that they own. - Ans✅✅✅ b) Owners
will devote less resources to developing new technology.
Given what happens to the price buyers pay and the price sellers ultimately receive
after a subsidy is granted to sellers, what happens to the level of consumer and
producer surplus after the subsidy takes effect?
a) Consumer surplus increases, while producer surplus decreases.
b) Both consumer surplus and producer surplus decrease.
c) Consumer surplus decreases, while producer surplus increases.
d) Both consumer surplus and producer surplus increase. - Ans✅✅✅ d) Both consumer surplus and
producer surplus increase.
The political action surrounding the location of federal nuclear waste dump sites in the US, can best be
described as having
a) concentrated costs and widely dispersed benefits.
b) concentrated costs and concentrated benefits.
c) widely dispersed costs and widely dispersed benefits.
d) widely dispersed costs and concentrated benefits. - Ans✅✅✅ a) concentrated costs and widely
dispersed benefits.
QUESTIONS AND EXAM REVIEW
California can best be described as what type of political issue?
a) Majoritarian issue.
b) Client issue.
c) Entrepreneurial issue.
d) Interest Group issue. - Ans✅✅✅ d) Interest Group issue
For any particular special interest group, lobbying over a specific political issue will
likely be successful
when the issue is classified as
a) a majoritarian issue.
b) a client issue.
c) an interest group issue.
d) an entrepreneurial issue. - Ans✅✅✅ a client issue
The 'special interest effect' refers to the bias of government in favor of policies that
a) support small groups at the expense of large groups.
b) serve national interests, such as national defense.
c) serve consumer interests at the expense of businesses.
d) support large groups at the expense of small groups of business firms. - Ans✅✅✅ support small
groups at the expense of large groups
Based on the Ventria Bioscience case; which of the following was considered to be
part of the potential stakeholder allies of Ventria?
a) World Health Organization.
b) California Secretary of Agriculture.
,c) Friends of the Earth.
d) Anheuser-Busch. - Ans✅✅✅ World Health Organization
Given an industry is producing the socially efficient output level, a tax placed on the
industry will result in inefficiency because the market will produce
a) too many units, as some units produced will have more productive costs than
consumer value.
b) too many units, as some units produced will have more consumer value than
productive costs.
c) too few units, giving up some units that have more consumer value than
productive costs.
d) too few units, giving up some units that have more productive costs than
consumer value. - Ans✅✅✅ c) too few units, giving up on some units that have more consumer value
than productive costs
Based on the Spotify case, how were music piracy sites (like Napster, Gnutella, and
Torrent) able to provide a framework for music swapping?
a) the ownership rights of produced music had never been defined by government
laws and regulations.
b) communal property rights are given to produced music, so everyone has the right
to use the songs that are produced.
c) the typical patent protection given to produced music does not apply to internet
consumers of music.
d) there was no enforcement within the internet of the copyright laws that protect
music producers. - Ans✅✅✅ d) there was no enforcement within the internet of the copyright laws
that protect music preferences
If a firm is earning zero economic profit, it
a) has incentive to shut down and leave the market.
, b) is earning below the normal rate of return.
c) is also earning zero accounting profit.
d) is doing as well as the typical firm of that industry. - Ans✅✅✅ d) is doing as well as the typical firm
of that industry.
Which one of the following
is not one of the benefits of well defined and enforced private property rights?
a) Voluntary exchanges between property owners will occur more frequently.
b) Owners will devote less resources to developing new technology.
c) Owners will have more incentive to use their property to benefit others.
d) Owners will have more incentive to maintain the resources that they own. - Ans✅✅✅ b) Owners
will devote less resources to developing new technology.
Given what happens to the price buyers pay and the price sellers ultimately receive
after a subsidy is granted to sellers, what happens to the level of consumer and
producer surplus after the subsidy takes effect?
a) Consumer surplus increases, while producer surplus decreases.
b) Both consumer surplus and producer surplus decrease.
c) Consumer surplus decreases, while producer surplus increases.
d) Both consumer surplus and producer surplus increase. - Ans✅✅✅ d) Both consumer surplus and
producer surplus increase.
The political action surrounding the location of federal nuclear waste dump sites in the US, can best be
described as having
a) concentrated costs and widely dispersed benefits.
b) concentrated costs and concentrated benefits.
c) widely dispersed costs and widely dispersed benefits.
d) widely dispersed costs and concentrated benefits. - Ans✅✅✅ a) concentrated costs and widely
dispersed benefits.
