Answer the following questions by providing one or two paragraphs for each.

Question 1.

Consider the effects of the following policy actions. To illustrate their effects identify real world policy situations in which they are used.

1. Setting a maximum quantity produced or employed (available for employment)
2. Setting a minimum price for the product or service

Question 2.

A corn farmer lives next to a cattle farmer. There is no fence between them. A problem has emerged. The cattle are straying into the corn fields and eating the corn. The corn farmer takes the cattle farmer to court. The court will decide the case by awarding the property right to one of the farmers - the right of the corn farmer to have the cattle farmer prevent the cattle from intruding or the right of the cattle farmer to expect the corn farmer to prevent this. How will the ultimate solution differ between these two alternatives - 1. The corn farmer gets the property right or 2. The cattle farmer gets the property right? In awarding the right what should the judge consider?

Question 3.

Carnegie Railroad buys and uses a lot of steel to construct railroads. It buys it from a number or private steel producers. After some consideration it decides to buy one of the steel suppliers, the one that appears most profitable, and to make its own steel. The Federal Trade Commission (FTC) however decides that this merger is anti-competitive (monopolistic) and prevents the deal. Do you think the FTC is right - why or why not?