Government intervention

a. List and explain the three most important expenditure programs of the federal government. How do these differ from the three most important expenditure programs of provincial and local governments? Explain why it makes more sense for the federal government to purchase "national defence" rather than the provincial government.

b. A recent increase in federal gasoline taxes was estimated to cause a $150 million reduction in the total (consumer plus producer) surplus in the gasoline market. If tax revenues increased by $100 million, what is the dead-weight loss associated with the tax? As a result of the tax, 10,000 people sold their cars and started riding their bicycles to work. How much of the burden of the dead-weight loss is incurred by the bicycle riders?