# Prof. Bryan Caplan

bcaplan@gmu.edu

http://www.bcaplan.com

Econ 410

1.  Contrast the private and social benefits of each of the following (2-3 sentences each).  If you think the private and social benefits are approximately equal, explain why.

a.  You go to a movie.

b.  You mow your lawn (think aesthetics).

c.  You take the Metro instead of driving during rush hour.

d.  You learn how to program computers.

e.  You invent a cure for AIDS.

2.  Contrast the private and social costs of each of the following (2-3 sentences each).  If you think the private and social costs are approximately equal, explain why.

a.  You start smoking marijuana.

b.  You mow your lawn (think noise).

c.  You drive late at night instead of taking the Metro.

d.  You put up a web page attacking organized religion.

e.  You rob a bank.

3.  Assume that national defense is a public good in the strong sense - an unsubsidized market produces NO defense even though the social benefits of it are high.  Carefully graph this market, showing the market quantity Qm and the efficient quantity Qe.  Shade the region of deadweight losses, and intuitively explain why these deadweight losses are so large. (1-2 sentences)

4.  "Immigrants impose externalities on American workers by reducing wages."  Carefully explain why this claim mis-uses the notion of externalities.  (3-4 sentences)

5.  "I give blood because I want blood to be there for me if I need it."  What would Olson say about this line of reasoning? (2-3 sentences)

6.  Using the probability of decisiveness from the notes, calculate the probability that one vote changes an election's outcome if:

a.  There are 9 voters total and voters other than yourself vote "for" with p=.65.

b.  There are 2001 voters total and voters other than yourself vote "for" with p=.55.

c.  There are 50,001 voters total and voters other than yourself vote "for" with p=.47.

7.  Assume you value your time at \$20/hour, and it takes an hour total to vote.  The probability that your vote changes an election's outcome is 1-in-10,000,000.  What difference in dollar value would you have to put on the two candidates' platforms to make it - on -average - selfishly profitable to vote?  (Hint: Voting will just barely pay if the expected value of voting exactly equals your value of time).

8.  Give one new (i.e. not in my lectures) example of:

a.  Instrumental voting

b.  Non-instrumental voting

c.  Rational voting

d.  Irrational voting

e.  Single-peaked preferences

f.  Multi-peaked preferences

9.  Using a median-voter diagram, explain why smoking regulations are stricter in California than North Carolina. (2-3 sentences)

10.  Suppose both Democrats and Republicans are worried about losing extremist votes by moderating too much.  Using a median-voter diagram, show their equilibrium platform choices.  Why or why don't their platforms converge? (1-2 sentences)

11.  Suppose both Democrats and Republicans have already alienated extremist votes; there is nothing either party can do to win them back.  Using a median-voter diagram, show their equilibrium platform choices.  Why or why don't their platforms converge? (1-2 sentences)

12.  Using two median-voter diagrams, explain why extending women's suffrage in the U.S. led to the Prohibition of alcohol.  (1-2 sentences)

13.  If you had to restrict the franchise in one way of your choice, what would it be?  Using the MVT, what is your best guess of the effect of your choice?  (3-4 sentences)

14.  Suppose there are three Russian voters in 1917 (Nicholas, Kerensky, and Lenin) and three choices (Czarism, Social Democracy, or Communism).  Voter preferences, from most to least favorite, are as follows:

Nicholas: {Czarism, Social Democracy, Communism}

Kerensky: {Social Democracy, Communism, Czarism}

Lenin: {Communism, Czarism, Social Democracy}

Is there a "Condorcet winner" among the three choices?  Are the alternatives intransitive?  Explain.  (2-3 sentences)