1. What would happen if we eliminated taxes and paid government programs with voluntary contributions instead?

2. Explain the difference between a private good and a public good. Why has there been an increase in the number of public goods "produced" by governments?

3. Explain why the free-rider problem occurs for public goods but not for private goods.

4. Why is the "optimal quantity of pollution" (the amount of pollution generated in any economic activity) never zero?

5. In the rest of the world, the tax on gasoline is considerably higher than in the United States, and gas consumption is considerably lower. Why doesn't the United States increase the gas tax?

6. How does a pollution tax cause consumers to help reduce pollution?

7. Do you believe the Government should set price controls over gasoline if its price rises toward five dollars per gallon in the future (as is likely, I fear)? What might be the impacts of such a policy?

8. Contributions to organizations like United Way and the American Cancer Society are tax-deductible: For each dollar contributed, a person's tax liability decreases by $0.15 to $0.31. Explain the rationale for this tax policy

9. Complete the statement with "low" or "high": Under a system of marketable pollution permits, a firm with ______ abatement costs will buy permits from a firm with _______ abatement costs.