Economics 410 Final

Prof. Bryan Caplan

Fall, 2015




·         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:  Whether something is a “private good” or a “public good” partly depends on government policies.











2. Donald Trump has positioned himself as the most anti-immigration Republican candidate. 


T, F, and Explain:  If Trump loses the Republican primary, then runs as a third-party candidate, standard models of fringe parties say this will lead to more anti-immigration policies.











3. Local governments provide free public education to residents’ children, regardless of the taxes they pay or family size.


T, F, and Explain: This is NOT what the Tiebout model predicts.










4. “They implicitly assume that neither party has squealed on the other and that consumers do not realize that a higher tariff means a higher price for goods.” (Wittman, The Myth of Democratic Failure)


T, F, and Explain:  Wittman objects that these assumptions are not only unrealistic, but hand-picked to make democracies’ tariff policies look bad.












5.  “Bliss was it in that dawn to be alive/But to be young was very heaven.”


T, F, and Explain:  Caplan (The Myth of the Rational Voter) quotes this passage to affirm his rejection of pessimistic bias.













6.  Suppose voters were rational and the SIVH were true.


T, F, and Explain: Democracies would spend a higher share of their budgets on genuine public goods.










Part 2: Short Answer

(20 points each)

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


1. Suppose geoengineering were a cost-effective remedy for global warming.  Would the leading democracies actually adopt it?  Use everything you’ve learned to justify your answer.



















2. Out of the four main economic biases Caplan discusses, which does the most harm to the global economy?  Justify your answer.