PUP 3002 - Ch 5-8 Quizzes Exam
Questions and Answers
Ch.6 - An ____ is an action that a principal takes prior to an agent's action to
incentivize a desired behavior. - ANSWER-ex-ante tactic
Ch.6 - The negative Pigouvian tax is a - ANSWER-subsidy.
Ch.6 - What is an outright ban or limitation on the amount of a given externality that
may be produced? - ANSWER-output standard
Ch.6 - What refers to the level of support that a citizen assigns to a specific policy? -
ANSWER-Direction
Ch.6 - What refers to how strongly a citizen feels about a given issue? - ANSWER-
Intensity
Ch.6 - What refers to the relative importance of a given issue relative to other
issues? - ANSWER-Salience
Ch.6 - What refers to the level of information that a citizen possesses on a specific
issue? - ANSWER-Knowledge
Ch.6 - What is it called when a principal chooses an agent with different
preferences? - ANSWER-adverse selection
Ch.6 - While a citizen may share preferences with a candidate on the environment,
abortion, and health care, they may hold opposing positions on foreign policy,
immigration, and taxation. What is this an example of? - ANSWER-cross-cutting
cleavages
Ch.7 - Which of the following best illustrates moral hazard? - ANSWER-A family
does not install a smoke alarm because they have fire insurance.
Ch.7 - What is it called when the price of health insurance for an individual is based
on the expected health costs of the larger population within which they live? -
ANSWER-Community rating
Ch.7 - To correct for moral hazard problems, health insurers use - ANSWER-co-
payments.
Ch.7 - In a(n) ____ program, recipients must demonstrate evidence of low income as
well as other factors in order to be enrolled. - ANSWER-means-tested
Questions and Answers
Ch.6 - An ____ is an action that a principal takes prior to an agent's action to
incentivize a desired behavior. - ANSWER-ex-ante tactic
Ch.6 - The negative Pigouvian tax is a - ANSWER-subsidy.
Ch.6 - What is an outright ban or limitation on the amount of a given externality that
may be produced? - ANSWER-output standard
Ch.6 - What refers to the level of support that a citizen assigns to a specific policy? -
ANSWER-Direction
Ch.6 - What refers to how strongly a citizen feels about a given issue? - ANSWER-
Intensity
Ch.6 - What refers to the relative importance of a given issue relative to other
issues? - ANSWER-Salience
Ch.6 - What refers to the level of information that a citizen possesses on a specific
issue? - ANSWER-Knowledge
Ch.6 - What is it called when a principal chooses an agent with different
preferences? - ANSWER-adverse selection
Ch.6 - While a citizen may share preferences with a candidate on the environment,
abortion, and health care, they may hold opposing positions on foreign policy,
immigration, and taxation. What is this an example of? - ANSWER-cross-cutting
cleavages
Ch.7 - Which of the following best illustrates moral hazard? - ANSWER-A family
does not install a smoke alarm because they have fire insurance.
Ch.7 - What is it called when the price of health insurance for an individual is based
on the expected health costs of the larger population within which they live? -
ANSWER-Community rating
Ch.7 - To correct for moral hazard problems, health insurers use - ANSWER-co-
payments.
Ch.7 - In a(n) ____ program, recipients must demonstrate evidence of low income as
well as other factors in order to be enrolled. - ANSWER-means-tested
