1. Assume you've just purchased a new $425,000 home in a fairly upscale area of your city. Your mortgage payments amount to about $2,800 per month at a 7% interest rate. You then learn that a new development of condominium rentals is to be built next door to you specifically for those low income families who qualify for reduced rent. In effect the city has placed a ceiling of $750 per month on what may be charged as rent for these condos. You would never qualify for this program because your level of income is too high.
2. Do you feel that this is fair to you? Explain.
3. Identify and explain at least 2 potential problems you see with this arrangement (you may want to reread the example in the lecture).
4. What suggestions would you have as to how you might take advantage of this situation (you may use hypothetical examples here).
5. Many feel that the government should have complete control over all areas of our economy, especially education and health care while others feel that the government should be as minimal as possible, delegating all economic and social matters to private businesses (for profit). Where do you stand on this issue? Give me good economic, political, and social reasoning to support your answer.
6. You know there will be a severe worldwide water shortage (quantity demand exceeding the supply available) within the next 35 years. What do you feel should be done to prevent it especially since over 65% of water usage is for agriculture and livestock (food for humanity)?
7. As of 2011 there is a severe shortage of food for the people in Somalia. People, especially young children are literally starving to death. The U.S. has been slow to help the Somalian people through this crisis mostly because an Islamic militant group al-Shabab controls more than 80 percent of southern areas where there are 500,000 malnourished children. Since this is a rebel group the U.S. does not want to be seen as a supporter by sending food to save the lives of these starving people.
8. Should the U.S. donate large amounts of food to this region? Why?
9. If it does donate food, what is the potential opportunity cost of doing so?
10. Does the U.S. as one of the richest nations in the world have an obligation to share its assets with other countries? Explain.