Exam 23: Microeconomic Policy, Economic Reasoning, and Beyond

The U.S. government does not allow toggle switches for power windows in automobiles. The National Highway Traffic Safety Administration found that the regulation will save about two children every three years and have negligible costs because the industry will have plenty of time to incorporate new switches into future vehicles. Evaluating this rule in terms of costs and benefits, an economist most likely would conclude that:

Why are the poor given little weight in the measure of consumer surplus?

The group of economists who believe politicians are subject to the laws of demand and supply and focus on this in their analysis are known as:

In Europe, government regulations discourage consumer credit. "It's to protect the consumer from himself," says Jacques Zeegers, secretary general to the Belgian Banking Association. As far as Mr. Zeegers is concerned, the government should worry that there is a failure caused by:

Liberal and conservative economists agree more often on policy prescriptions than most noneconomists think they do.

The long-run market solution to a wage that is so low that workers cannot survive is:

Policy makers who listen to the academic economists from whom they ask advice:

Failure of market outcomes can occur even when the market is functioning properly.

Suppose a person can play the lottery for $1.00. His chance of winning $25 million is 1 in 50 million. If there are no other costs or benefits involved, the logic of cost/benefit analysis says:

How do the concepts of market failure and failure of market outcome relate to the concept of Pareto optimality?

If a policy is Pareto optimal:

What do economists mean when they say a situation is Pareto optimal?

Market equilibrium maximizes the sum of:

A government airline safety regulation reduces the probability of a fatal airline crash by 0.005. If the costs associated with each airplane crash are equal to $600 million, the regulation has an expected marginal benefit of at least:

Two economists are debating whether to remove a tariff on luxury vehicles. They agree that consumers will benefit by $5 billion and that the harm done to domestic businesses and workers will be only $4 billion. One argues that these facts make it obvious that the tariff should be removed. The other disagrees. What would be a likely reason for the second economist to disagree?

One reason mainstream economists see the world differently than do noneconomists is that economists tend to stress the importance:

The cost of repositioning an automobile gas tank for greater safety is $11 per vehicle for 12.5 million vehicles. The automobile company places a value on life of $500,000. To justify redesigning the location of the gas tank, the number of deaths expected to occur if the gas tank location is not redesigned would have to be at least:

When Marxist economists look at labor markets, they:

Suppose two economists disagree about whether a particular tax cut is a good policy. The economist supporting the cut believes that it will increase economic growth. The other economist opposes it because he thinks it will have no effect on growth. The source of their disagreement in this case is most likely due to different:

A Pareto optimal policy improves: