Microeconomics
13th Edition
ISBN: 9781337671590
Author: Arnold
Publisher: Cengage
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Chapter 18, Problem 12QP
To determine
Evaluate the statement regarding rent seeking.
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Friedrich von Hayek won the Nobel Prize in Economics in 1974. In awarding the prize, the Academy specifically referred to his conclusion quoting the Academy, not Hayek "that only by far-reaching decentralization in a market system with competition and free price-fixing is it possible to make full use of knowledge and information."
What did the Academy mean?
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The second Nobel Memorial Prize in Economics was awarded to Paul Samuelson in 1970. Explain some of his contributions to the development of modern economics.
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- What is the difference between in-kind and cash transfers? Winch might increase the utility of the recipients the most? Why is there political resistance to the negative income tax?arrow_forwardWhich of the following statements refers to rent seeking? "Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws." "The federal government should spend more money on programs that help low income citizens and less money on national defense." "The role of the federal government in the U.S. economy grew significantly after the Great Depression. Government spending and taxes are a much greater proportion of total income today than they were in 1929." "There is an opportunity cost whenever the federal government spends tax revenue. For example, an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program."arrow_forwardWhat is the effect of economic dependency in our society?arrow_forward
- Define Dependency Theory?arrow_forwardWhich of the following statements regarding the Hotelling rent is current? a. It reflects the opportunity cost of extracting the resource today instead of in the future.b. It is the reason that price is equal to marginal cost in the dynamic efficiency model.c. It reflects market power. d. It is the reason that price is lower than marginal cost in the dynamic efficiency model.arrow_forwardIn 2011, the government paid $600 million in retirement benefits to decreased federal employees. This is an example ofarrow_forward
- Identify some essential elements common to any rational decision-making process?arrow_forwardDuring the Oklahoma Land Rush of 1889, which role of prices would have been on display if not for the government’s mismanagement of this market? The rationing role which states that as prices rise, only those buyers most willing and able to pay would have gained the land they desired. The resource directly role which states that fluctuating prices signals seller where to allocate resources like land and capital. The information role that teaches us how rising prices conveys a message that prices were below equilibrium when the government conducted the land rush. The barter-elimination role of prices because the invisible hand would have led to a price above zero and an efficient market outcome. All the above.arrow_forwardSuppose that initially a seller's "bottom line" asking price for a particular car is equal to $23,000. However, a new tax is instituted that will tax the seller in the amount of 10% on the sale. What is the seller's new "bottom line" after factoring in the new tax?arrow_forward
- What are the main goal or goals of rent control (holding rent below equilibrium rent; price ceilings.)? Be precise. In other words, what is the overall social/economic purpose or objective of rent control or rent stabilization?arrow_forwardThe following two linear functions represent a market (thus one is a supply function, the other a demand function). Circle the answer closest to being correct. Approximately what will the quantity demanded be if the government controls the market price to be $3.00 (You must first find the market equilibrium price and quantity in order to see how the $3.00 relates to them)? Q = 100 – 4.6P and Q = 75 + 6.2P 2 There has been a change in the market (represented in 1 above). The change is represented by the following two equations. Circle the one correct conclusion that describes the market change. Q = 65 + 6.2P and Q = 80 – 4.6P 3 Circle the function on the answer sheet that represents the marginal revenue (MR) function for this demand function: Q = 150 – 5Parrow_forwardThe trade-off between efficiency and equity is of great importance to economists. Why are economists so concerned about the impact of government policies and actions on efficiency and equity? Base your answer on economic theory.arrow_forward
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