Question 1

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

Accepted Answer

The answer of If the purpose of taxation is to...

Question 2

Behavioral economics suggest that individuals have bounded willpower and have a bias towards future consumption and future utility.

Accepted Answer

Behavioral economics suggests that individuals often have bounded willpower, but it typically argues that there is a present bias rather than a bias towards future consumption. This means individuals tend to overvalue immediate rewards at the expense of future utility.

Question 3

The following statement is attributed to Justice Oliver Wendell Holmes: "Taxes are what we pay for a civilized society." Do you agree or disagree with his statement? Why or why not? What do you consider to be the most relevant considerations involved in evaluating this statement?

Accepted Answer

The answer of The following statement is attributed to Justice...

Question 4

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

Accepted Answer

The answer of If the purpose of taxation is to...

Question 5

Compare and contrast each of the following pairs of economic terms:
a.Ability-to-pay principle versus benefits-received principle
b.Merit and demerit goods
c.Government purchases versus government expenditures
d.Means-tested and non-means-tested transfer payments
e.Progressive tax versus regressive tax
f.Public choice theory and public interest theory analyses of choices in the public sector

Accepted Answer

The answer of Compare and contrast each of the following...

Question 6

Give several examples of market failure.Discuss what, if any, corrective action could reduce such problems.

Accepted Answer

The answer of Give several examples of market failure.Discuss what,...

Question 7

The presence of external benefits may result in government action because the external benefits are not included in the market price of a good.

Accepted Answer

External benefits, also known as positive externalities, are benefits that accrue to third parties who are not involved in the production or consumption of a good or service. These benefits are not reflected in the market price of the good or service, and therefore, the market may fail to produce an efficient outcome. As a result, the government may intervene to correct this market failure by providing subsidies or other incentives to encourage the production or consumption of the good or service that generates the external benefit.

Question 8

Economist Herbert Simon suggested that individuals possess limited abilities and limited time for processing information resulting in sub-optimal problem solving and bounded rationality.

Accepted Answer

Herbert Simon's theory of bounded rationality proposes that individuals have limitations in their ability to process information and time constraints, leading to sub-optimal problem-solving.

Quiz 15: Public Finance and Public Choice

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

Behavioral economics suggest that individuals have bounded willpower and have a bias towards future consumption and future utility.

The following statement is attributed to Justice Oliver Wendell Holmes: "Taxes are what we pay for a civilized society." Do you agree or disagree with his statement? Why or why not? What do you consider to be the most relevant considerations involved in evaluating this statement?

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

Give several examples of market failure.Discuss what, if any, corrective action could reduce such problems.

The presence of external benefits may result in government action because the external benefits are not included in the market price of a good.

Economist Herbert Simon suggested that individuals possess limited abilities and limited time for processing information resulting in sub-optimal problem solving and bounded rationality.