What is cost-benefit analysis? Suppose that you were asked to do a cost benefit analysis of tearing down an elderly woman’s ancestral home to provide space to expand a local high school. What difficulties might you encounter? What will be an ideal response? ANSWER In cost-benefit analysis, a dollar value is placed on all […]
If everyone agrees to a change, then the change will be a Pareto Superior move. a. True b. False ANSWER a
Which of the following is not a reason why government programs might fail to achieve their goals? a. Insufficient information to correctly achieve the goal. b. One policy goal is in direct conflict with another policy goal. c. Politicians respond to political incentives to deviate from the goal. d. Inability to use coercion to achieve […]
The free rider problem _____. a. leads to an understatement of demand for the good in question b. is beneficial because it leads to lower public spending c. is functionally equivalent to the transitional gains trap d. is more prevalent in small groups ANSWER a
Cost-benefit analysis does not employ interpersonal utility calculations. a. True b. False ANSWER b
An underproduction of goods occurs when there is _____. a. free riding b. government production c. holdout d. eminent domain ANSWER a
The holdout problem arises when unanimous approval among members of a group is required_____. a. for a Pareto efficient move to occur b. for a Pareto superior move to occur c. for government to decide to undertake the project d. for government to be able to levy the tax to fund the project ANSWER […]
While limited in their practical applications, the real value of the Pareto criteria is in allowing the public interest to be judged without making interpersonal utility calculations. a. True b. False ANSWER a
Every market exchange is a Pareto superior move. a. True b. False ANSWER b
The above figure depicts a short-run production function for Albert’s Pretzels. The marginal productivity of labor A) rises then falls as the amount of capital increases. B) falls then rises as the amount of labor increases. C) is greater than or equal to the average productivity of labor for all amounts of labor. D) is […]
