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

Special interest group Z receives a 1/200^th slice of the economic pie. Its net benefit from both an economic growth policy and a transfer policy is $60,000. How much does the size of the economic pie (Real GDP) need to grow before group Z is indifferent between the two policies?

In a divisive society the members of groups within the society see themselves as

When a negative externality exists, _______________________ and thus _______________ intervention may be needed to achieve efficiency.

Exhibit 35-1 ​ -Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen have entered into an agreement and are currently in box 1. There is no enforcer to their agreement. Jaden and Karen are likely to

Individuals want nonexcludable public good X, but the market does not provide it because of the free rider problem. Government overcomes the free rider problem by ______________ individuals and then either producing good X itself or paying someone to produce it.

Which of the following situations is used as a justification for government?

"I'm not going to pay for the good if, once produced, the good cannot be denied to anyone." This statement is most relevant to

Given that the demand for unskilled labor curve is downward-sloping, an unintended effect of raising the minimum wage is that some people who worked at the lower wage will lose their jobs at the higher wage.

Special interest group A receives a 1/10,000^th slice of the economic pie (Real GDP). It is seeking a transfer of $1,000. For group A to be indifferent between a transfer policy and an economic growth policy, economic growth must be ________________ times larger than the _________________.

Some people see the government as being more heavily involved in taking sides than in serving the common interest.

In the case of a negative externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.

In the case of a nonexcludable public good, the market will fail to produce the good because of the free rider problem.

Which of the following statements is false?

A tax credit given to first-time home buyers would result in a _____________ shift in the ______________ curve for housing, which would lead to the unintended result of a(n) _____________ in the price of housing.

Which of the following statements is false?

If the government grants tax credits to first-time homebuyers, the supply of houses would increase and the price of housing would fall.

A divisive society is one in which members of society work together for the common good.

Most economists believe that the market __________ produce nonexcludable public goods because of the __________.

When the government imposes a tariff on imported goods, it _____________ prices for domestic consumers, ________________ consumers' surplus and _________________ the producers' surplus for domestic producers.

Exhibit 35-1 ​ -Refer to Exhibit 35-1, where the higher the number, the better the position for the person to whom the number is connected. Jaden and Karen are currently in box 4, each receiving 10. they would like to move to box 1, where each receives 12. Without someone to ________________ their agreement, moving from box 4 is ______________________.