Rational ignorance helps explain why
a. legislators often trade votes on key issues to produce positive-sum games between them
b. legislators usually disregard the desires of those constituencies that cannot influence their chances for reelection
c. voters spend considerable time and effort to gather information to protect themselves against legislators with hidden agendas
d. it is rational for legislators to ignore the wishes and desires of all of their constituents
e. voters may choose to remain ignorant of issues when there are large costs associated with becoming informed
QUESTION 2In the long run, economic profit for a monopolistically competitive firm
a. is zero, due to the lack of barriers to entry
b. is zero, due to product differentiation
c. may be positive, due to strong barriers to entry
d. may be positive, due to product differentiation
e. may be positive, due to advertising and product promotion
QUESTION 3Rational ignorance occurs when
a. voters find the cost of understanding a specific issue is greater than the expected benefit
b. legislation generates large benefits for a few people but imposes costs on many people
c. the preferences of the median voter dominates public choices
d. individuals or firms attempt to obtain favorable treatment from government officials
e. people make public decisions based on emotion rather than a rational analysis
QUESTION 4Monopolistically competitive firms
a. are guaranteed to earn short-run economic profit
b. may earn short-run economic profits, although long-run economic profit is typically zero
c. may earn economic profit both in the short run and in the long run
d. earn zero economic profit both in the short run and in the long run
e. can only earn an economic profit in the inelastic portion of their demand curves
QUESTION 5Susie spends more of October thinking about her Halloween costume than she spends thinking about a proposed law that will be on the November ballot. Which of the following is true?
a. This behavior is rational if she expects a greater benefit from the costume than from any possible effect her vote could have on the proposed law.
b. This behavior is rational if she is planning to spend the time from Halloween to Election Day thinking about the law.
c. This behavior is not rational because the law is more important than the costume.
d. In order for this behavior to be considered rational, it would have to be true that Susie is too ignorant to fully understand the law.
e. In order for this behavior to be considered rational, it would have to be true that Susie would not be affected by the law.
QUESTION 6Which of the following characteristics does perfect competition share with monopolistic competition?
a. price-taking firms
b. zero long-run economic profit
c. homogeneous product
d. some barriers to entry
e. economies of scale in production
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