Set 5

  1. Which of the following is a cost associated with government intervention in an economic​ system?
  2. Given that there are costs involved with government intervention in an​ economy, governments still choose to intervene in markets to​ ____________.
    address externalities
  3. How would this explain the thriving black market for cigarettes in New​ York?
    It is more profitable to sell cigarettes on the black market in New York.
  4. How would you depict the​ trade-off between equity and efficiency on a​ graph?
    Inequality on one axis and social surplus on the other with a​ positively-sloped function.
  5. A government would want to be on this curve where​ ___________.
    there is no correct answer to this​ question, as the answer depends on a​ government's value judgments.
  6. What is the equity implication of imposing an estate​ tax?
    It is fair because it reduces inequality.
  7. What is the efficiency implication of imposing an estate​ tax?
    It is inefficient because it reduces investment.
  8. Paternalism is the view that​ ___________.
    people do not always know what is best for them, and the government should encourage them to make the right choices.
  9. Consumer sovereignty suggests that​ ____________.
    government should not interfere with consumer choices.
  10. Why are there two different views on the effect of taxation on labor supply in the United​ States?
    All of the above.
Card Set
Set 5
exam 3