Question 1

5. Property rights and market failures Musicians are much V likely to supply recordings to the market if property rights are not enforced. Public policy can improve economic efficiency in the presence of market failures. Complete the following table by classifying the source of market failure in each case. Ma rket Market Failure Power Externality A local bar plays its extremely loud jukebox deep into the night, disturbing its residential neighbors. A single cable provider is the only source of internet in a certain city, giving the company the ability to influence the price of home wifi. 6. The interaction of individual choices Individuals living in the state of Iowa like to consume both soybeans and blueberries. While it is possible for farmers to grow both crops in Iowa, almost no farmers elect to use their land to grow blueberries. Instead, every year, Iowa exports soybeans and imports blueberries from nearby Michigan, where growers specialize in blueberries. Which of the following principles of economic interaction best describes this scenario? Trade can make everyone better off. When markets do not achieve efficiency, government intervention can improve overall welfare. All costs are opportunity costs. There is a tradeoff between equality and efciency. 7. Changes in incentives Suppose that a large influx of electric scooter rentals in a crowded downtown area results in a lot of new riders on the streets. For their safety, the mayor of the city decides to enact a law requiring helmets when renting scooters. These new helmets reportedly decrease the probability of injury by 29% in the event of a scooter crash. While the new helmets V the probability of injury resulting from a scooter accident, they also incentivize individuals to ride Y recklessly, which could V the number of scooter collisions and therefore injuries to renters. 8. Factors that influence standard of living Which of the following factors played the biggest role in the slow growth of average incomes in the United States during the 19705 and 19805? Disinflation of the dollar Slow growth in productivity Increased competition from India Increased competition from Japan