One rationale for government involvement in health care markets is that government involvement is necessary to prevent the spread of contagious diseases, which can be a type of externality. Which of the following is not an example of a public health externality? a. The provision of vaccinations against communicable diseases. b. The provision of clean […]
The most important difference between unit excise taxes and ad valorem excise taxes is _____. a. the unit tax will change in response to a change in the price of the taxed good, while the ad valorem tax will not b. the unit tax will not change in response to a change in the price […]
Does education increase economic growth? Explain your answer. What will be an ideal response? ANSWER Yes. While the relationship is not easily quantified, but there does seem to be a positive relationship between education and economic growth. At the same time, however, higher incomes (from economic growth) cause individuals to consume more education, so […]
A disadvantage of unit excise taxes is they create the incentive _____. a. for producers to favor smaller products over larger products b. for producers to favor expensive products over inexpensive products c. for buyers to purchase more of the good then they otherwise would d. for buyers to shift to substitute goods with ad […]
The median voter model examines the outcome of majority rule decisions and _____. a. concludes that the outcome will be the one preferred by the median voter b. assumes that the outcome will be determined by the median voter c. uses the median voter to analyze the decision-making of bureaucrats d. found that the median […]
Describe the argument that education generates a positive externality. Why might this externality not be relevant in terms of economic efficiency? What will be an ideal response? ANSWER Education is often said to produce a positive externality because there are positive spillovers from getting an education for which the consumer of education is not […]
One advantage of ad valorem taxes over unit taxes is that _____. a. the tax is more difficult to evade b. the tax is easier to collect c. the tax increases with inflation d. the tax automatically adjusts for inflation ANSWER d
How has the financing of elementary and secondary education changed in the United States since 1940? What is the primary reason for this trend? What will be an ideal response? ANSWER Historically, elementary and secondary education in the United States was a local enterprise. This meant school financing was traditionally financed mostly at the […]
“Americans hate broccoli.” “Because so few Americans like broccoli, average broccoli sales are lower in America then anywhere else.” Which of these two statements about the preferences of Americans is more accurate? Why? What will be an ideal response? ANSWER The second statement is more accurate because groups do not have preferences, only individuals […]
A unit tax has an advantage over an ad valorem tax in situations when _____. a. inflation is high b. it is easy to estimate the value of the good being taxed c. it is difficult to estimate the value of the good being taxed d. inflation is low ANSWER c
