1) Three Short Answer Questions relating to Govenment Economics.

a) In New Ontario (a hypothetical land), the tax rate on personal income above $10,000 is 20%. Thus far in 2020 you have reported earnings of $9,500. Suppose that someone offers you $1,000 in exchange for no work at all (this someone is very nice), and that they and you would report the income to Canada Revenue Agency. Should you accept the money? Why?

b)What are examples of public monopolists in Canada? Can you think of technological reasons that these markets are monopolistic? Do you think that these public sector monopolies go very far in solving the efficiency problems that would be faced in that market if it were a private monopoly?

c) Government has an advantage over private producers: it has the coercive power to solve some kinds of market failures. Does government use that power properly? Does government have any disadvantages relative to private producers? or why not?