1-1. How has the composition of federal, state, and local government spending changed over the past 40 years? [Ch. 1]

1-2. What social and economic factors might have contributed to this change in how governments spend their funds? [Week 3 Class Discussion]

2-1. Why does redistribution cause efficiency losses? [Ch. 2]

2-2. Why might society choose to redistribute resources from one group to another when doing so reduces the overall size of the economic pie? [Ch. 2]

Q.3 [2.5% of the grade]:

Because the free market (competitive) equilibrium maximizes social efficiency, why would the government ever intervene in an economy? [Ch. 2]

Q.4. [2.5% of the grade]:

In two-car automobile accidents, passengers in the larger vehicle are significantly more likely to survive than are passengers in the smaller vehicle. In fact, death probabilities are decreasing in the size of the vehicle, you are driving, and death probabilities are increasing in the size of the vehicle you collide with. Some politicians and lobbyists have argued that this provides a rationale for encouraging the sale of larger vehicles and discouraging legislation that would induce automobile manufacturers to make smaller cars. Critically examine this argument using the concept of externalities. [Ch. 5]