1. (a). Agreement and disagreement among economists

Suppose that Edison, an economist from a research institute in Texas, and Hilary, an economist from a nonprofit organization on the West Coast, are arguing over health insurance. The following dialogue shows an excerpt from their debate:

HILARY: A popular topic for debate among politicians as well as economists is the idea of providing government assistance for health benefits.

EDISON: I think it is oppressive for the government to tax people who take care of themselves in order to pay for health insurance for those who are obese.

HILARY: I disagree. I think government funding of health insurance is useful to ensure basic fairness.

Q) The disagreement between these economists is most likely due to:

a. imperfect information

b. differences in values

Q) Despite their differences, with which proposition are two economists chosen at random most likely to agree?

a. Taxing polluters will never help to protect the environment.

b. Rent controls will only add value to housing in a city.

c. Free trade is usually preferable to the erection of tariffs and quotas.

2. Effects of rent control

1. Price floors set minimum prices at which goods can be sold. When price floors are set high enough,(surpluses / shortages )occur, because at the higher price, it is(less / more)profitable for suppliers to produce and sell a product. However, at this higher price,(more / fewer )consumers are willing to purchase these goods.

2.True or False: The consequences of price floors are not accidental but result from the ways in which free markets operate.

a. True

b. False

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