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Econ 370
HW#5 (please
type; diagrams
may be drawn by hand)
Answer all of
the four Questions for each
of the five Products.
Products
1.
Highways
2.
Primary and
university education
3.
Health care
4.
Food and drug
inspection
5.
Cable
television
Questions
1.
Discuss the
externalities – both positive and negative – of laissez-faire market provision
of this good. In practice, would
government regulation or government ownership help solve these problems, or
make them worse?
2.
What do you
think is the most efficient method of providing the good: laissez-faire,
regulation, government ownership, or some mixture of the three? Provide some details (2-3 sentences) about
how the product would be most efficiently provided.
3.
We sub-divided
efficiency problems into three groups: Ability problems, Knowledge problems,
and Incentive problems. In which of the
three areas does your suggested method of provision have the largest efficiency
advantage compared to the alternatives?
Why?
4.
Do the less
efficient systems have any non-economic advantages (such as greater
equality, freedom, security, justice, etc.) over the more efficient
system? Are these sufficient to make you
prefer the less efficient methods of provision?