Exam 23: Microeconomic Policy, Economic Reasoning, and Beyond

A proposal to build a dam on a wild river may look like a good idea from the cost/benefit study done by the Army Corps of Engineers, but an analysis done by the Sierra Club might suggest that the dam would be a complete waste of money. When different groups give us radically different cost/benefit results:

According to standard economic theory, rational individuals:

Suppose a professional baseball catcher has heard about a new "super deluxe catcher's mask that is guaranteed to protect catchers from being permanently brain damaged by a foul ball to the head." This mask costs $750 and Alias Sports Bureau (a baseball statistics company)has issued a report that using this mask will lower a catcher's risk of serious brain damage due to a foul ball to the head from 2/250,000 to 1/250,000.The baseball catcher eagerly buys this mask.By purchasing this mask,what is the implicit value the catcher is placing on his brain?

Sin taxes are most effective when imposed on goods for which:

If a person would buy equipment with safety features that cost $100 extra and those features reduce the chance of having a fatal accident by 1/500, the person is implicitly valuing his or her life at a minimum of:

What is one reason the United States produces luxury cars such as the Chevy Corvette but still does not provide health care for all individuals?

In discussing government policy regarding foreign trade, an economist stresses the power that big U.S. corporations have over people in poor countries, a power that they can use to exploit the poor. This way of seeing the world is most compatible with:

Basing decisions on marginal cost and marginal benefit means that people should:

Suppose a radar-activated braking system that can help prevent crashes is an option on a new car. It costs $600 and reduces the chance of dying in an auto accident by 1/700. The implicit value placed on life by a person who has the system installed is therefore:

People make decisions every day that reflect a finite (as opposed to infinite)valuation of their own lives.

Both liberal and conservative economists believe that:

Failure of market outcomes occurs when:

A government policy maker is trying to decide which of four methods of reducing highway noise in a residential area should be implemented. She is looking at these four options: Plan Benefits Custs A \ 500,000 \ 490,000 B \ 550,000 \ 530,000 C \ 570,000 \ 540,000 D \ 600,000 \ 580,000 If she uses the cost/benefit logic of economics, which plan will she propose?

Most economists would agree that each human life is beyond price.

The cost of repositioning an automobile gas tank for greater safety is $11 per vehicle for 12.5 million vehicles. It is expected that 180 deaths will occur if the gas tank location is not redesigned. Failure to redesign the gas tank location therefore implies that the automobile company is implicitly valuing human life at:

Which of the following is one of the reasons economists sometimes differ in their views on social policy?

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

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

When workers earn below-subsistence wages in a free market economy, some workers will starve. As a result, the supply of labor curve will shift:

When society achieves economic efficiency, it is: