Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / 1
|
1. Suppose that for Jim the marginal benefit (MB) of producing is $60 and that the marginal cost (MC) of producing is $10. Suppose also that his marginal benefit of stealing is $50 and the marginal cost of stealing is $10. Is Jim currently maximizing utility in terms of producing and stealing? If not, should he produce more and steal less, or produce less and steal more to move toward utility maximization?
|
|
2. Suppose that for Alicia the marginal benefit (MB) of producing is $75 and that the marginal cost (MC) of producing is $5. Suppose also that her marginal benefit of stealing is $85 and the marginal cost of stealing is $5. Is Alicia currently maximizing utility in terms of producing and stealing? If not, should she produce more and steal less, or produce less and steal more to move toward utility maximization?
|
|
3. Which of the following statements is true?
|
|
4. Which of the following statements is false?
|
|
5. In the case of a negative externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.
|
|
6. In the case of a positive externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.
|
|
7. When a negative externality exists, _______________________ and thus _______________ intervention may be needed to achieve efficiency.
|
|
8. When a positive externality exists, _______________________ and thus _______________ intervention may be needed to achieve efficiency.
|
|
9. A consequence of a negative externality is that social costs __________ private costs, and the efficient level of output __________.
|
|
10. In the case of a negative externality, the government can use a ________________ to turn an inefficient outcome into an efficient one. In the case of a positive externality, the government can use a ________________ to turn an inefficient outcome into an efficient one.
|
|
11. In the case of nonexcludable goods, economists contend that the market ___________ produce these goods because of the ________________________.
|
|
12. When a good is nonexcludable, then individuals
|
|
13. Most economists believe that the market __________ produce nonexcludable public goods because of the __________.
|
|
14. A negative externality exists and government wants to impose a tax in order to bring about an efficient outcome. To accomplish its objective, government must set the tax equal to marginal
|
|
15. A positive externality exists and government wants to impose a subsidy in order to bring about an efficient outcome. To accomplish its objective, government must set the subsidy equal to marginal
|
|
16. A positive externality exists and government wants to apply a per-unit subsidy in order to bring about an efficient outcome. Under what condition will the solution (the subsidy) be worse than the problem (the market failure)?
|
|
17. An unintended effect of a new tax placed on the producers of good A may include
|
|
18. A tax credit given to first-time home buyers would result in a _____________ shift in the ______________ curve for housing, which would lead to the unintended result of a(n) _____________ in the price of housing.
|
|
19. Which of the following statements is false?
|
|
20. Which of the following statements is false?
|
|
21. One of the objectives of the health-care reform bills passed in March 2010 was to bring _____________ people into the pool of insured persons so that insurance policies would become ________________. However, provisions in the bill are likely to make the average cost of an insurance policy _____________ than it would have been without reform.
|
|
22. When the government imposes a tariff on imported goods, it _____________ prices for domestic consumers, ________________ consumers’ surplus and _________________ the producers’ surplus for domestic producers.
|
|
23. Special interest group X receives a 1/150th slice of the economic pie. Its net benefits from an economic growth policy are $7,000, which are the same as its net benefits from a transfer policy. What is the change in the size of the economic pie (Real GDP) that is required to bring about this result?
|
|
24. Which of the following statements is true?
|
|
25. Special interest group Z receives a 1/200th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $30,000. How much does the size of the economic pie (Real GDP) need to grow before group Z is indifferent between the two policies?
|
|
26. In the prisoner's dilemma setting for stealing and producing, both participants end up __________, which turns out to be ________________________ stolen. The government _________ make both participants better off by changing the payoff matrix.
|
|
27. Which of the following situations is used as a justification for government?
|
|
28. Which of the following is usually discussed in the case against government?
|
|
29. In the case of a negative externality,
|
|
30. In the prisoner’s dilemma setting for producing and stealing, a tax imposed on participants could end up changing the payoff matrix so that
|
|
31. Special interest group Q receives a 1/10,000th slice of the economic pie. Its net benefit from either an economic growth policy or a transfer policy is $50,000. In order for group Q to be indifferent between the two policies, the economic growth policy would have to make the size of the economic pie (Real GDP) grow by _________________. This type of analysis is used to show that special interest groups tend press government for ______________ instead of ________________.
|
|
32. Which economist said, “This focus on distribution makes the significance of distributional issues (transfer issues) in political life relatively greater and the significance of widespread common interest in political life relatively smaller.”?
|
|
33. A divisive society is a nonexcludable public _____________ because it comes with ____________.
|
|
34. In a divisive society the members of groups within the society see themselves as
|
|
35. Special interest group K receives a 1/100th slice of the economic pie. Its net benefit from either an economic growth policy or a transfer policy is $200,000. In order for group K to be indifferent between the two policies, the economic growth policy would have to make the size of the economic pie (Real GDP) grow by _________________. This type of analysis is used to show that special interest groups tend to press government for ______________ instead of ________________.
|
|
Situation 37-2 |
|
36. Refer to Situation 37-2. If Dan’s MB/MC ratio for producing is currently greater than his MB/MC ratio for stealing, then he will
|
|
37. Refer to Situation 37-2. Ann spends 8 hours of each day producing and 1 hour of each day stealing. It is probably the case for her that
|
|
38. Refer to Situation 37-2. Both Dan and Ann realize that they are better off producing and not stealing from each other than producing and stealing from each other. They agree not to steal from each other. There is no enforcer of their agreement to not steal. It is likely that
|
|
Exhibit 37-1 
|
|
39. Refer to Exhibit 37-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen have entered into an agreement and are currently in box 1. There is no enforcer to their agreement. Jaden and Karen are likely to
|
|
40. Refer to Exhibit 37-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen are currently in box 4, each receiving 10. they would like to move to box 1, where each receives 12. Without someone to ________________ their agreement, moving from box 4 is ______________________.
|
|
41. The essence of a prisoner’s dilemma setting is that if both person A and person B do what is best for each of them,
|
|
42. If government removes two people from a prisoner’s dilemma setting (and, in the process, requires that the two persons pay taxes for the service that government provides), it holds that on net
|
|
43. Which of the following statements is false?
|
|
44. Consider a setting in which there is a negative externality, but no positive externality. It follows that
|
|
45. Consider a setting in which there is a negative externality, but no positive externality. The market outcome is __________________; government can bring about the ___________________ outcome if it sets a tax equal to the __________________.
|
|
46. Consider a setting in which there is a positive externality, but no negative externality. The market outcome is __________________; government can bring about the ___________________ outcome if it sets a subsidy equal to the __________________.
|
|
47. The government can _______________ change an inefficient market outcome (in the case where there is a negative externality) into an efficient outcome by imposing a tax on the activity that generates the negative externality.
|
|
48. The strongest case for government with respect to a negative externality is that government needs to set the
|
|
49. Government provides a nonexcludable public good that no one wants. This situation is most closely related with:
|
|
50. Which of the following statements is false?
|
|
51. Individuals want nonexcludable public good X, but the market does not provide it because of the free rider problem. Government overcomes the free rider problem by ______________ individuals and then either producing good X itself or paying someone to produce it.
|
|
52. A nonexcludable public good is
|
|
53. The answer is, “Because of the free rider problem.” The question is:
|
|
54. “I’m not going to pay for the good if, once produced, the good cannot be denied to anyone.” This statement is most relevant to
|
|
55. Person A argues that government is unnecessary and often does more harm than good. Economist A disagrees. What does economist A --- who believes that there is a legitimate case that can be made for government --- most likely say to support his position?
|
|
56. Economist A believes that the case for government is a strong one, but she doesn’t always say, when it comes to negative externalities, that government can turn an inefficient market outcome into an efficient outcome. Which statement is economist A most likely to make?
|
|
57. Economist B thinks that it is important to identify the condition(s) under which the case for government is strongest. With respect to the provision of nonexcludable public goods, she says
|
|
58. Suppose health-care reform X makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease. One unintended effect of this reform is that some people
|
|
59. Suppose health-care reform Y makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease and sets a fine for those people who do not buy insurance. It follows that if the fine is
|
|
60. The federal government and many state governments gave tax credits to first-time home buyers in 2009 and 2010. An effect of these tax credits was to
|
|
61. To say that government sometimes functions as a “transfer mechanism,” means that government sometimes
|
|
62. Tiffany gives $50 to Jeremy for his birthday. This is an example of a(n)
|
|
63. A special interest group has a good chance of redistributing (transferring) income from others to itself if the
|
|
64. Why might special interest groups be more likely to push for transfers instead of economic growth? The answer is because it usually takes a much __________________ percentage _______________ in growth to equal what they can get from the transfer.
|
|
65. A community of 100 persons wants to redistribute (transfer) some income from themselves to members of group A. So far, they don’t seem to be able to do what they say they want to do. This is most likely because each member of the community of 100 persons sees his contribution as __________________ relative to the total (of contributions) and therefore chooses to be a __________________.
|
|
66. Special interest group A receives a 1/10,000th slice of the economic pie (Real GDP). It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be ________________ times larger than the _________________.
|
|
67. Government provides a nonexcludable public good that the public demands and can’t seem to acquire through the market. This is government
|
|
68. In the case of externalities, government can use taxes and subsidies to turn an inefficient outcome into an efficient outcome.
|
|
69. Government always makes individuals better off when it removes them from a prisoner’s dilemma setting.
|
|
70. In the case of a nonexcludable public good, the market will fail to produce the good because of the free rider problem.
|
|
71. Critics of government frequently assert that special interest groups favor transfer policies rather than economic growth policies.
|
|
72. Government can overcome the free rider problem by collecting taxes and using the funds to provide individuals with nonexcludable public goods that they want to buy but the market cannot provide.
|
|
73. It is possible for the government to remove individuals from a prisoner’s dilemma setting and make them better off.
|
|
74. If the government grants tax credits to first-time homebuyers, the supply of houses would increase and the price of housing would fall.
|
|
75. Given that the demand for unskilled labor curve is downward-sloping, an unintended effect of raising the minimum wage is that some people who worked at the lower wage will lose their jobs at the higher wage.
|
|
76. Involuntary transfers are the type of transfers used in the case against government.
|
|
77. Special interest groups are very unlikely to push for policies that increase the size of their slice of the economic pie if it means that the overall size of the economic pie will shrink.
|
|
78. Some people see the government as being more heavily involved in taking sides than in serving the common interest.
|
|
79. A divisive society is one in which members of society work together for the common good.
|
|
80. List and describe the three different types of transfers discussed in this chapter. Give a hypothetical example of each to help support your answer.
|
|
81. Describe the intended effects of the first-time home buyer tax credits granted by Congress and many state governments in 2009 and 2010. In addition, describe in detail the unintended effect of this type of legislation.
|
|
82. In making the case against government, discuss the two main points about special interest groups.
|
