ECO 479 Chapter questions

ECO 479 Chapter questions - 13. Proper hygiene, such as...

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13. Proper hygiene, such as regular hand-washing, can greatly limit the spread of many diseases. How might this suggest a role for public interventions? What kinds of public interventions might be possible? Suggest three distinct types of possible interventions. Individuals tend to ignore the external costs they impose on others by failing to wash their hands frequently enough (or by failing to employ other sorts of hygienic practices). This suggests that they tend to wash their hands less than optimally and that there may therefore be a role for public interventions. One possible intervention would be a requirement that individuals wash their hands after using restrooms. (Such regulations are imposed for employees at businesses, for example.) A second possible intervention is public provision of hand-washing facilities. This would reduce the cost of hand-washing, thereby encouraging individuals to engage in that activity more frequently. A third possibility would be an advertising campaign to encourage hand-washing. 6. Consider the utilitarian social welfare function and the Rawlsian social welfare function, the two social welfare functions described in Chapter 2. a. Which one is more consistent with a government that redistributes from rich to poor? Which is more consistent with a government that does not do any redistribution from rich to poor? The Rawlsian social welfare function is consistent with redistribution from the rich to the poor whenever utility is increasing in wealth (or income). The utilitarian social welfare function can also be consistent with a government that redistributes from the rich to the poor, for example, if utility depends only on wealth and exhibits diminishing marginal utility. However, the Rawlsian social welfare function weights the least-well-off more heavily, so it will generally prescribe more redistribution than the utilitarian social welfare function. b. Think about your answer to a. Show that government redistribution from rich to poor can still be consistent with either of the two social welfare
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functions. If utility depends only on wealth and exhibits diminishing marginal utility, and if efficiency losses from redistribution are small, then both the utilitarian and Rawlsian social welfare functions can be consistent
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This note was uploaded on 02/07/2011 for the course ECO 479 taught by Professor Staff during the Spring '08 term at Kentucky.

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ECO 479 Chapter questions - 13. Proper hygiene, such as...

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