Exam 35: The Economic Case for and Against Government Five Topics Considered

Special interest group Q receives a 1/10,000^th slice of the economic pie. Its net benefit from either an economic growth policy or a transfer policy is $50,000. In order for group Q to be indifferent between the two policies, the economic growth policy would have to make the size of the economic pie (Real GDP) grow by _________________. This type of analysis is used to show that special interest groups tend press government for ______________ instead of ________________.

Situation 35-2 ​ Dan and Ann live in the same community and both can participate in two activities, producing and stealing. -Refer to Situation 35-2. Both Dan and Ann realize that they are better off producing and not stealing from each other than producing and stealing from each other. They agree not to steal from each other. There is no enforcer of their agreement to not steal. It is likely that

Suppose health-care reform Y makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease and sets a fine for those people who do not buy insurance. It follows that if the fine is

In the case of a negative externality,

Which economist said, "This focus on distribution makes the significance of distributional issues (transfer issues) in political life relatively greater and the significance of widespread common interest in political life relatively smaller."?

Government can overcome the free rider problem by collecting taxes and using the funds to provide individuals with nonexcludable public goods that they want to buy but the market cannot provide.

Consider a setting in which there is a negative externality, but no positive externality. The market outcome is __________________; government can bring about the ___________________ outcome if it sets a tax equal to the __________________.

Which of the following statements is false?

The essence of a prisoner's dilemma setting is that if both person A and person B do what is best for each of them,

Person A argues that government is unnecessary and often does more harm than good. Economist A disagrees. What does economist A --- who believes that there is a legitimate case that can be made for government --- most likely say to support his position?

A divisive society is a nonexcludable public _____________ because it comes with ____________.

Which of the following statements is true?

Special interest group X receives a 1/150^th slice of the economic pie. Its net benefits from an economic growth policy are $7,000, which are the same as its net benefits from a transfer policy. What is the change in the size of the economic pie (Real GDP) that is required to bring about this result?

Government always makes individuals better off when it removes them from a prisoner's dilemma setting.

Which of the following statements is false?

Which of the following is usually discussed in the case against government?

To say that government sometimes functions as a "transfer mechanism," means that government sometimes

Situation 35-2 ​ Dan and Ann live in the same community and both can participate in two activities, producing and stealing. -Refer to Situation 35-2. If Dan's MB/MC ratio for producing is currently greater than his MB/MC ratio for stealing, then he will

Which of the following is used by economists as an argument in the case against government?

Critics of government frequently assert that special interest groups favor transfer policies rather than economic growth policies.