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 […]
Rawls argued that agreement on certain rules from behind a “veil of ignorance” would make those rules optimal. a. True b. False ANSWER a
Actions based on the more general Pareto criteria are preferable to actions based on application of interpersonal utility calculations. a. True b. False ANSWER a
For private consumption goods, the optimal number of users is determined by the unanimity rule. a. True b. False ANSWER b
Suppose the market for a good is expressed as follows: Inverse demand: P = 200 – 2Q Inverse supply: P = 2Q What is the equilibrium if the government imposes a supply quota of 75 units? What is the equilibrium if the government imposes a supply quota of 25 units? ANSWER The market equilibrium […]
Provide four reasons for the changes observed in per-pupil spending during the latter half of the twentieth century. What will be an ideal response? ANSWER The first reason for the changes observed in per-pupil spending over that time period is that schools are using more resources than they were using in 1940 . For […]
Suppose the market for potatoes can be expressed as follows: Supply: QS = -20 + 10p Demand: QD = 400 – 20p If the government sets a maximum price of $10 per unit, what will be the quantity demanded and quantity supplied? ANSWER With a maximum price of $10, suppliers will sell only 80 […]
