Question
Choose ONLY ONE of the following two topics for your public policy analysis.Make sure your analysis includes the following subtopics: First, what is the RATIONALE
Choose ONLY ONE of the following two topics for your public policy analysis.Make sure your analysis includes the following subtopics:
First, what is the RATIONALE for the policy?
TRACE the effects of the policy using the market diagram for the good, and a market diagram for the substitute, Describe what is happening in your graphs.
EVALUATE the policy forefficiencyin the product mix, in distribution, and in production; forequity(horizontal and vertical) andliberty.
EXPLAIN the politics behind the policy.Will politicians who support this policy be more likely to gain votes or lose them?
Option A:The Mexican Tortilla Market
The problem: The diet of poor people in Mexico relies heavily on inexpensive corn tortillas.Unfortunately for them, in the early 2000s, U.S. decided to replace a large portion of their imported oil with fuel made corn (called ethonal).As a result of the growing U.S. demand for corn, global corn prices rose dramatically and the tortillas were no longer inexpensive.
The policy:The Mexican government placed a price ceiling on corn tortillas which kept the legal price below the market price.(You may considerwheat tortillas a substitute for corn tortillas.
OptionB:The Airline Monopoly
In the town of Red Level Alabama, there is a very small population and a tiny airport.There is one flight that operates between the town and the nearest big airport hub in Atlanta.Currently, there is only one flight, and it usually has quite a few empty seats on it and ticket prices are high.Although there is no law against competitors coming in, none have appeared in the 10 years that the airport has beenopen.
The policy:The city council is seeking to regulate the airline's prices to insure a "fair rate of return."How do you expect this to affect the residents of Red Level?
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