The gap between Social Security funds and expenditures will become unsustainably large within the next 50 years if current policies remain unchanged. (85%) Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%) A large federal budget deficit has an adverse effect on the economy. (83%) The redistribution of income in the United State is a legitimate role for the government. (83%) Inflation is caused primarily by too much growth in the money supply. (83%) The United States should not ban genetically modified crops. (82%) A minimum wage increases unemployment among young and unskilled workers. (79%) The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%) Government subsidies on ethanol in the United States should be reduced or eliminated. (78%) CHAPTER FOUR MARKETS AND COMPETITION What is a Market? A market is a group of buyers and sellers of a particular good or service. o The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product. Markets take many forms o Some markets are highly organized, such as the markets for many agricultural commodities. In these markets, buyers and sellers meet at a specific time and place, where an auctioneer helps set prices and arrange sales. o More often, markets are less organized. For example, consider the market for ice cream in a particular town. Buyers of ice cream do not meet together at any one time. The sellers of ice cream are in different locations and offer somewhat different products What is Competition? Most markets in the economy are highly competitive Economists use the term competitive market to describe a market in which there are so many buyers and so many sellers that each has a negligible impact on the market price o Each seller of ice cream has limited control over the price because other sellers are offering similar products. o No single buyer of ice cream can influence the price of ice cream because each buyer purchases only a small amount We assume that markets are perfectly competitive ; To reach this highest form of competition, a market must have two characteristics: o The goods offered for sale are all exactly the same o The buyers and sellers are so numerous that no single buyer or seller has any influence over the market price. Because buyers and sellers in perfectly competitive markets must accept the price the market determines, they are said to be price takers There are some markets in which the assumption of perfect competition applies perfectly.
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