PUBLIC POLICY EXAM WITH CORRECT ANSWERS #1
What is public policy? - correct answer A course of government action or inaction in
response to public problems; associated w/ formally approved policy goals and means,
as well as the regulations & practices of agencies that implement programs
Policy outputs - correct answer Formal actions that governments take to pursue their
goals
Example: a grant program to states to assist development w/ innovative educational
programs to improve student achievement
Policy outcomes - correct answer Effects those actions [policy outputs] have on society
Example: how much the grant program increased student achievement
Why should we care about public policy? What is the goal of government? - correct
answer To make our lives better!
Essence of public policy - correct answer "Failure of human potential can almost always
be traced to bad public policy: a lack of good public institutions, a failure to give voice to
a nation's people, a lack of public infrastructure (roads, ports, etc.), or some other policy
failures that stifle human potential"
What are some challenges to creating good public policy? - correct answer (1) When do
we actually need govt.
(2) Different ideas & definitions about "better"
(3) Finding one single measure to judge on
(4) Tradeoffs
(5) Human behavior
Prisoner's dilemma - correct answer A model that depicts how 2 rational agents, each
trying to maximize their own utility but unable to make a binding agreement w/ the other,
behave in a way that makes both of them worse off
How does the prisoner's dilemma play out? - correct answer (1) 2 prisoners separated &
unable to communicate
(2) Each faces a choice to confess in exchange for a more lenient sentence, or not to
confess making a conviction harder
(3) Rational behavior (concern w/ minimizing own sentence) leads to less beneficial
collective outcome
-Best rational, individual choice is to confess; also worse collective outcome
Rival vs. Non-rival goods - correct answer Non-rival if one's use does not limit another's
use
Exclusive vs. Non-exclusive - correct answer Non-exclusive if we cannot prevent
someone from using it
, Example of rival, exclusive goods (private goods) - correct answer Cars
Example of rival, non-exclusive goods (common-pool resources) - correct answer
Community pool w/ cap; "The Commons"
Example of non-rival, exclusive goods (club goods) - correct answer Cable TV
Example of non-rival, non-exclusive goods (public goods) - correct answer Any good
that is unlimited and available to anyone, regardless of anything
*National Defense, radio, some public policy outcomes
Collective action problem: "Collective irrationality" - correct answer When each
individual in a group pursues a rational strategy, yet the collective outcome is bad for all
of those same individuals
Which type of good are most likely to cause collective action problems? - correct
answer Non-exclusive goods ("The Commons" and public goods)
Common-pool resources: "Tragedy of the Commons" (Hardin, 1968) - correct answer
(1) Individuals acting rationally, in their own self-interest, will ruin 'the commons'
(2) The larger the group the worse the collective action problem can be
(3) **Need for policies to prevent collective irrationality
How do we overcome collective action problems? - correct answer (1) Regulation;
monitor & enforce
(2) Government provides the good
(3) Privatization
(4) Provide 'selective incentives'
What is an overarching theme with collective action problems? What do we learn from
them? - correct answer Importance of institutions to overcome collective action
problems and make our lives better
Unintended consequences - correct answer Policies introduce perverse incentives and
create another problem when seeking to solve one
Example: rating doctors, medical malpractice suits, requiring car seats on flights
Moral hazard - correct answer An individual or firm is protected from a loss and
therefore acts w/ less caution, resulting in a bad outcome
Example: flood insurance, reckless driving in a rental car
Adverse selection - correct answer Actors sort themselves into or out of market
transactions
Example: health insurance/Obamacare, teaching profession, Movie Pass
What is public policy? - correct answer A course of government action or inaction in
response to public problems; associated w/ formally approved policy goals and means,
as well as the regulations & practices of agencies that implement programs
Policy outputs - correct answer Formal actions that governments take to pursue their
goals
Example: a grant program to states to assist development w/ innovative educational
programs to improve student achievement
Policy outcomes - correct answer Effects those actions [policy outputs] have on society
Example: how much the grant program increased student achievement
Why should we care about public policy? What is the goal of government? - correct
answer To make our lives better!
Essence of public policy - correct answer "Failure of human potential can almost always
be traced to bad public policy: a lack of good public institutions, a failure to give voice to
a nation's people, a lack of public infrastructure (roads, ports, etc.), or some other policy
failures that stifle human potential"
What are some challenges to creating good public policy? - correct answer (1) When do
we actually need govt.
(2) Different ideas & definitions about "better"
(3) Finding one single measure to judge on
(4) Tradeoffs
(5) Human behavior
Prisoner's dilemma - correct answer A model that depicts how 2 rational agents, each
trying to maximize their own utility but unable to make a binding agreement w/ the other,
behave in a way that makes both of them worse off
How does the prisoner's dilemma play out? - correct answer (1) 2 prisoners separated &
unable to communicate
(2) Each faces a choice to confess in exchange for a more lenient sentence, or not to
confess making a conviction harder
(3) Rational behavior (concern w/ minimizing own sentence) leads to less beneficial
collective outcome
-Best rational, individual choice is to confess; also worse collective outcome
Rival vs. Non-rival goods - correct answer Non-rival if one's use does not limit another's
use
Exclusive vs. Non-exclusive - correct answer Non-exclusive if we cannot prevent
someone from using it
, Example of rival, exclusive goods (private goods) - correct answer Cars
Example of rival, non-exclusive goods (common-pool resources) - correct answer
Community pool w/ cap; "The Commons"
Example of non-rival, exclusive goods (club goods) - correct answer Cable TV
Example of non-rival, non-exclusive goods (public goods) - correct answer Any good
that is unlimited and available to anyone, regardless of anything
*National Defense, radio, some public policy outcomes
Collective action problem: "Collective irrationality" - correct answer When each
individual in a group pursues a rational strategy, yet the collective outcome is bad for all
of those same individuals
Which type of good are most likely to cause collective action problems? - correct
answer Non-exclusive goods ("The Commons" and public goods)
Common-pool resources: "Tragedy of the Commons" (Hardin, 1968) - correct answer
(1) Individuals acting rationally, in their own self-interest, will ruin 'the commons'
(2) The larger the group the worse the collective action problem can be
(3) **Need for policies to prevent collective irrationality
How do we overcome collective action problems? - correct answer (1) Regulation;
monitor & enforce
(2) Government provides the good
(3) Privatization
(4) Provide 'selective incentives'
What is an overarching theme with collective action problems? What do we learn from
them? - correct answer Importance of institutions to overcome collective action
problems and make our lives better
Unintended consequences - correct answer Policies introduce perverse incentives and
create another problem when seeking to solve one
Example: rating doctors, medical malpractice suits, requiring car seats on flights
Moral hazard - correct answer An individual or firm is protected from a loss and
therefore acts w/ less caution, resulting in a bad outcome
Example: flood insurance, reckless driving in a rental car
Adverse selection - correct answer Actors sort themselves into or out of market
transactions
Example: health insurance/Obamacare, teaching profession, Movie Pass
