Microeconomics Ch 20

1. Which of the following categories is the smallest fraction of the U.S. federal budget? Which are the two largest? Welfare Interest on the federal debt Defense Foreign aid Social Security Medicare

How many famines have occurred in functioning democracies?

What percentage of famines have occurred in countries without functioning democracies?

Around 130 million voters participated in the 2008 U.S. presidential election. Imagine that you are deciding whether to vote in the next presidential election. What do you think is the probability that your vote will determine the outcome of the election?

If a particular government policy—like a decision to go to war or to raise taxes— only works when citizens are informed, is that an argument for that policy or against that policy?

Assess the validity of the following statements. I. During Bangladesh's politically created famine, the average amount of food per person was much lower than usual. II. Democracies are less likely to kill their own citizens than other kinds of governments

Assess the validity of the following statements. I. Surprisingly, newspapers aren't that important for informing voters about hungry citizens. II. Compared with dictatorship or oligarchy, democracies have a stronger incentive to make the economic pie bigger.

Assess the validity of the following statements. I. Compared with most other countries, full democracies tend to put a lot of restrictions on markets and property rights. II. When it comes to disposable income, American presidents seem to prefer "making a good first impression" rather than "going out with a bang."

Perhaps it was in elementary school that you first realized that if everyone in the world gave you a penny, you'd become fantastically rich. This insight is at the core of modern politics. Sort the following government policies into "concentrated benefits" and "diffuse benefits." I. Social Security II. Tax cuts for families III. Social Security Disability Insurance for the severely disabled IV. National Park Service spending for remote trails V. National Park Service spending on the National Mall in Washington, D.C. VI. Tax cuts for people making more than $250,000 per year

An initiative on Arizona's 2006 ballot would have a $1 million lottery prize handed out every election. The only way to enter the lottery would be to vote in a primary or general election. How do you think a lottery like this would influence voter ignorance?

We mentioned that voters are myopic, mostly paying attention to how the economy is doing in the few months before a presidential election. If they want to be rational, should they pay attention to all four years of the economy, just the first year, just the last two years, or some other combination?

Driving along America's interstates, you'll notice that few rest areas feature commercial businesses. Vending machines are the only reliable source of food or drink, much to the annoyance of the weary traveler looking for a hot meal. Thank the National Association of Truck Stop Operators (NATSO), who consistently lobby the U.S. government to deny commercialization in these areas. They argue that: "Interchange businesses cannot compete with commercialized rest areas, which are conveniently located on the highway right-of-way. . . . [R]est area commercialization results in an unfair competitive environment for privately operated interchange businesses and will ultimately destroy a successful economic business model that has proven beneficial for both consumers and businesses." How does the NATSO argument affect travel for consumers?

Driving along America's interstates, you'll notice that few rest areas feature commercial businesses in these areas. Vending machines are the only reliable source of food or drink, much to the annoyance of the weary traveler looking for a hot meal. Thank the National Association of Truck Stop Operators (NATSO), who consistently lobby the U.S. government to deny commercialization. They argue that "Interchange businesses cannot compete with commercialized rest areas, which are conveniently located on the highway right-of-way. . . . [R]est area commercialization results in an unfair competitive environment for privately operated interchange businesses and will ultimately destroy a successful economic business model that has proven beneficial for both consumers and businesses." Why does NATSO often succeed in its lobbying efforts despite the fact that it inconveniences a large number of travelers?

We mentioned that the median voter theorem doesn't always work, and sometimes a winning policy doesn't exist. This fact has driven economists and political scientists to write thousands of papers and books, both proving that fact and also trying to find good workarounds. The most famous theoretical example of how voting doesn't work is the Condorcet paradox. The Marquis de Condorcet, a French nobleman in the 1700s, wondered what would happen if three voters had preferences like those below. Three friends are holding a vote to see which French economist they should read in their study group. Here are their preferences: They vote by majority rule. If the vote is Walras vs. Say, who will win? Say vs. Bastiat? Bastiat vs. Walras?