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Unformatted text preview: Quiz #1 Then surf around False Questions a bit 10 True Econ 4 Sp 07, sec 003 Answer A for True and B for False Good Luck! 1. The author of "Highway Robbery" (the speeding in Finland article) believes that it is "stupid" to base speeding fines in Finland on the speeder's income. 2. We employed the rationality assumption when discussing the all you can eat example. In particular, if the (expected) marginal benefit of an additional crumb of food is greater than zero, then you should eat that crumb of food, since it will make you better off (assuming the marginal cost of that crumb of food is zero). 3. According to the hurricane Hugo example and the idea of letting markets work, the governor of S. Carolina did the correct thing by imposing a price ceiling on plywood since this price ceiling prevented black markets from forming. 4. According to the class size amendment #9 discussion from Florida, it is clear from the existing empirical evidence that smaller class sizes do increase student performance as measured by standardized test scores. 5. In our discussion of command vs. capitalistic economic systems, total welfare is higher (the size of the pie is bigger) in a command system since government can allocate scarce resources better (more efficiently) than the free market can. 6. One role for government, even in a capitalistic "Adam Smith: Laissez Faire" set up, is to deal with externalities such as pollution, since the private market has a difficult time dealing with these externalities. 7. The reason that the private market fails to produce public goods is due to the fact that the marginal cost of an additional user of a public good is zero. 8. Adam Smith's invisible hand theorem suggests that if individuals are able to maximize their own individual welfare, then social welfare will be maximized as well! 9. In an socialistic economy, the "How it is Produced" question is usually answered by the government where in a capitalistic economy, this same question is answered by individual firms (with maximum profit as their goal). 10. I think the minimum wage should be set so that someone working full time at minimum wage can support a family of four. This is an example of a positive economic statement. ...
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This note was uploaded on 03/29/2008 for the course ECON 004 taught by Professor Graf,pauledwin during the Spring '07 term at Penn State.
- Spring '07