1.Give 2 arguments why wealthy taxpayers should pay more taxes than poor taxpayers. Be sure your answers are based on what is in the book.

2. How might education raise a worker's wage without raising productivity?

3. What are the pros and cons of in-kind (rather than cash) transfers to the poor?

4. Describe how anti-poverty programs can discourage the poor from working. How might you reduce this disincentive?

5. Give an example of a positive externality and a negative externality. How could each impact the well-being of others?