Exam 23: Stocks,bonds,futures,and Options

Suppose that for Jim the marginal benefit (MB)of producing is $60 and that the marginal cost (MC)of producing is $10.Suppose also that his marginal benefit of stealing is $50 and the marginal cost of stealing is $10.Is Jim currently maximizing utility in terms of producing and stealing? If not,should he produce more and steal less,or produce less and steal more to move toward utility maximization?

One of the objectives of the health-care reform bills passed in March 2010 was to bring _____________ people into the pool of insured persons so that insurance policies would become ________________.However,provisions in the bill are likely to make the average cost of an insurance policy _____________ than it would have been without reform.

Which of the following statements is true?

The strongest case for government with respect to a negative externality is that government needs to set the

A positive externality exists and government wants to apply a per-unit subsidy in order to bring about an efficient outcome.Under what condition will the solution (the subsidy)be worse than the problem (the market failure)?

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

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

List and describe the three different types of transfers discussed in this chapter.Give a hypothetical example of each to help support your answer.

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

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

The answer is,"Because of the free rider problem." The question is:

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 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?

Dan and Ann live in the same community and both can participate in two activities,producing and stealing. -Refer to Situation 37-2.If Dan's MB/MC ratio for producing is currently greater than his MB/MC ratio for stealing,then he will

Consider a setting in which there is a negative externality,but no positive externality.It follows that

Special interest groups are very unlikely to push for policies that increase the size of their slice of the economic pie if it means that the overall size of the economic pie will shrink.

Special interest group K receives a 1/100^th slice of the economic pie.Its net benefit from either an economic growth policy or a transfer policy is $200,000.In order for group K 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 to press government for ______________ instead of ________________.

When a good is nonexcludable,then individuals

A community of 100 persons wants to redistribute (transfer)some income from themselves to members of group A.So far,they don't seem to be able to do what they say they want to do.This is most likely because each member of the community of 100 persons sees his contribution as __________________ relative to the total (of contributions)and therefore chooses to be a __________________.

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