Economics 410 Final

Prof. Bryan Caplan

Fall, 2013




·         You have 75 minutes to complete this exam. 

·         Write all answers directly on the exam.

·         You may use any books, notes, or other materials that you wish, but avoid spending too much time on any one question. 

·         Partial credit may be awarded on all questions. 

·         The maximum possible number of points is 100.

·         You should have 4 pages, counting this one.


Part 1: True, False, and Explain

(10 points each - 2 for the right answer, and 8 for the explanation)

State whether each of the following six propositions is true or false.  In 2-3 sentences (and clearly-labeled diagrams, when helpful), explain why.


1.  T, F, and Explain:  A pollution tax is more efficient than a quantitative limit on pollution because a tax, unlike a quantitative limit, provides government revenue.












2. Older citizens are more likely to vote.


T, F, and Explain:  Since the SIVH is false, elderly voters’ high participation rates have no systematic effect on policy.












3. T, F, and Explain: Wittman would argue in favor of subdividing existing governments to increase inter-governmental competition.











4. “The bigot who refuses to serve blacks in his shop foregoes the profit he might have made from their custom; the anti-Semite who will not work with Jews is constrained in his choice of jobs and many well have to knock back one she would otherwise have accepted.” (Brennan and Lomasky, Democracy and Decision, quoted in Caplan, Myth of the Rational Voter)


T, F, and Explain:  In terms of the expressive voting model, Brennan and Lomasky are saying that people will discriminate in favor of A over B if:

IA + EA > IB + EB











5.  T, F, and Explain:  Government censorship could reduce the frequency and severity of availability cascades.












6.  After World War II, the United States imposed new constitutions on defeated Germany and Japan.


T, F, and Explain:  These constitutional changes were less likely to compensate for voter irrationality than constitutional changes that endogenously arose out of German and Japanese democracy.












Part 2: Short Answer

(20 points each)

In 4-6 sentences, answer both of the following questions.


1. Name two major policy changes we would expect local governments to adopt if the Tiebout model were entirely true.  Carefully defend your answer.




















2.  Rothbard (“Utility Ex Post”) argues that the average person is far shrewder as a consumer than as a voter.  What is his weakest argument?  How could it be improved?