Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 5, Problem 8CQ
To determine
Identify whether the given statement is true or false.
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Unless quality and price are regulated by government, travelers would have no chance for a fair deal. Local people would be treated well, but the traveler would have no way to know, for example, who offers a good night's lodging at a fair price." Is this true or false? Explain.
Insurance premiums are very high for young drivers largely due to the fact that young drivers get into more automobile accidents than other drivers. Do you think that it is fair that young people are charged more for the same insurance that other drivers have? Is it fair that regardless of how good of a driver is, just because a driver is young he or she is charged more for their car insurance?
Adam Smith’s theory of the invisible hand is often used to justify a hands-off approach to market activity. Can you give an example where government intervention in a market led to an inefficient outcome? How about an example where government intervention improved the outcome?
Chapter 5 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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Similar questions
- I can purchase a wide variety of books, as can all students in this class. Each book has a different topic, genera, and writing style. Many people can write books and thanks to the growth of self publishing it very easy to sell your own books. What is the most appropriate market structure for books? Why?arrow_forwardSince humans have two kidneys, you could sell a kidney and still live a long, healthy life. Given that there is such a demand for organs, do you think we should allow individuals to sell their organs like kidneys? Who do you anticipate would be most likely to sell their organs and who are the most likely to buy organs? Do you foresee any unintended consequences of legalizing the sale of organs?arrow_forwardwhy does the government provide tornado sirens, street lights, and lighthouses but not radio stations (other than PBS stations)?arrow_forward
- Why does government intervention become necessary in the situation of market failure?arrow_forwardThe speed limit on Singapore roads, even expressways, never exceeds 90 kmh, much less than the top speed of HPCs. But there is a road racing culture where individuals perform stunts and races on public roads, far exceeding speed limits. What, if anything should government do about the HPC market? Should such cars be banned outright? What would be the problems with such interventions?arrow_forwardHelp me understand the consequences of the market failurearrow_forward
- In most countries, government policy to eliminate narcotic problem is to catch narcotic producers/sellers, i.e. reducing supply. Why might the policy turn out to make narcotic producers better off (financially)? What should be a better policy to eliminate the narcotic problem?arrow_forwardHow can government prevent market failure?arrow_forwardexplain whether there has been a market failure, what type of failure, and what measures might solve it, You should consider: the advantages and disadvantages of any solution whether doing nothing might be the best solution the concept of efficiency. A health insurance provider finds that the health of its customers is much worse than the average health of the population anything else you think important.arrow_forward
- Evaluate the arguments for government intervention in the markets.arrow_forwardIs “fairness” the economic basis for government laws and regulations designed to remedy market failures? If so, why; if not, what is the economic basis?arrow_forwardRecognize how changes in supply and demand affect market outcomes and explain the effect of government regulation on prices?arrow_forward
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