Review Sheet

Mid-Term Exam

Part I: Short Answer (40%)

Directions

You have 10 short answer questions worth 4 points each. The short answer questions will come in various forms such as: List three types of _____ ; Define and explain how three types of _____ operate; Explain what is meant by ______ ; In the video/case what was meant by _____? Accordingly, some answers will involve listing terms while other will require describing terms or concepts in either a few sentences or short paragraphs. You should also be able to apply them to videos and handouts discussed in class. In general, there will not be much overlap between the essay questions and the short answer questions.


Terms/Concepts
Policy analysis	Experience goods
"Speaking truth to power"	Post-experience goods
Steps in the policy analysis process	Uncertainty and incomplete insurance markets
Questions analysts ask at each stage of the process	Risk premium
Steps in the rational planning/decision making model	Law of large numbers
Policy	Adverse selection
Public policy	Moral hazard
Policy outputs versus outcomes	Human dignity as a rationale for policy
Stages of the policy process	Common evaluative criteria
Agenda setting	Effectiveness
Institutional, governmental, official agenda	Intangible costs/benefits
Systemic or noninstitutional agenda	Tangible costs/benefits
Pluralist vs. elites models	Monetarizable costs/benefits
Agenda setting	Direct vs. indirect costs
Policy entrepreneurs/saboteurs	Sunk costs
How the distribution of costs/benefits influences agenda setting?	Shadow prices
Stages of the policy process where policy analysts have most influence	Fixed vs. variable costs
Problem definition	Average costs
Methods for defining problems	Marginal cost
Market failure	Law of diminishing/increasing returns
Pareto efficient	Economies/diseconomies of scale
Opportunity costs	Human dignity
Invisible hand	Equity
Rivalrous consumption (subtractability)	Horizontal vs. vertical equity
Excludable ownership and use	Redistributional equity
Congestibility	Fiscal equivalence
Public goods	Transitional equity
Private goods	Intergenerational equity
Toll goods	Fiscal federalism questions
Open access/common pool resource good	Technical feasibility
Externality (Positive & Negative)	economic and financial possibility
Natural monopoly	Administrative operability
Information asymmetries	Political Feasibility/viability
Search goods

Part II: Essay Questions (60%)

Directions

You will have to answer three questions below (20 points each). Each answer should clearly address all aspects of the question. You should define all key terms/concepts used in your answer. You should also support your answer using examples from books, lectures, class notes, videos, or handouts whenever possible.

1) Describe the steps in the policy analysis process. What questions and types of analysis occurs during each step? Unfortunately, many students of public policy complain that policy analysis has not been influential in the policymaking process. Why do you think that might be the case? What can be done to make analysis more useful to policymakers?

2) Describe the stages in the public policy process. Be sure to describe how issues get elevated on the agenda and the different models of the agenda setting process. Are some issues likely to get elevated than others? Be sure to also describe the role that policy analysts play in this process? Are they more active in some stages and not in others?

3) Using the concepts illustrated by the typology in Table 3.2 in reserve reading #2 to answer the following question. Identify 1 public policy problem for each of the 4 cells in the table. At least two problems should be on the institutional/governmental agenda. Explain how the 4 problems got elevated on either the systemic or institutional agendas. Which agenda setting models best explain this process? Then explain why each problem is best located in the cell in Table 3.2. Do you agree with the outcomes for these problems proposed by the table?

4) One rationale given for government intervention is when asymmetries of information are present. Why should government get involved in private markets when information asymmetries are present? What are some different types of goods that create potential information asymmetries? Explain each type and provide a common example. What are some steps that the public or private sector takes to resolve these information asymmetries?

5) Read the handout entitled 'Video Game Law Sought". Using the theories and concepts discussed in the readings and lecture notes, explain the different rationale's for government intervention that exist in this instance.

6) Three common areas that local government intervenes in private markets are in the zoning of land uses, police and public safety, and providing sewage treatment plants. For each activity, describe the different rationales for government intervention that support government action in each case. Be sure to use the terms and concepts from the readings and lecture notes to support your answers.

7) Earlier this semester we discussed how equity concerns often conflict with efficiency. The following situations present potential equity concerns. For each situation, describe what equity issues exist. Be sure to use the terms and concepts discussed in readings and lecture notes.

The legislature is proposing a new law requiring curbside trash collection for all single-family homeowners in every county in NC. To help offset the economic impacts, the state will allocate a one-time grant of $250,000 to every county. Each county will have 1 year to comply with the new law.
A county is proposing curbside trash collection for all single-family homeowners in the county. The cost of the new program will be recovered through a user fee that charges each single-family homeowner a $25 monthly fee.
A county is proposing curbside trash collection for all single-family homeowners in the county. The cost of the new program will be recovered through a user fee that charges each single-family homeowner a $25 monthly fee. However, to alleviate the impacts on those with fixed incomes, senior citizens over the age of 65 and families with household incomes less than $35,000 will pay a reduced user fee of $15 per month.

8) Of the evaluative criteria described in the readings, which criteria to do you think is the most important for judging public policy proposals or programs? Why? Which criteria is the least useful for judging public policy proposals or programs? Why?

9) Read the handout describing the economic impacts of a proposed project in Carolina Beach. Using the data in the article, answer the following questions. In some cases you may need to make assumptions about potential costs or benefits that are not mentioned in the article to answer the questions.

Identify a direct cost/benefit and an indirect cost/benefit. Briefly explain the difference.
Identify a tangible cost/benefit and an intangible cost/benefit. Briefly explain the difference.
Identify a monetarizable and a non-monetarizable benefit or cost. Briefly explain the difference.
Identify a fixed cost and a variable cost. Briefly explain the difference.
Identify an example of an opportunity cost and explain why it should be viewed as such?
Identify a positive & negative externality

10) Assume you work as a policy analyst and your agency has adopted policies or programs to address the following goals:

Reduce childhood obesity
Reduce street crime in particular neighborhoods
Improve high school graduation rates

How might you measure the effectiveness of each policy or program. For each, be sure to identify the three evaluative criteria and the measures you would use to determine if the criteria was met.

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