The economics of the public sector

 Answer the questions below in your own words, using at least 100 words per question. 

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1. In your opinion, how can behavioral economics be used for YOU as a student? How would you apply and use behavioral economics if you were a small business owner? How can behavioral economics justify or assist in the understanding of diminishing marginal utility?

 

2. Consider the term “welfare economics,” and apply it to the allocation of resources and its effects on today’s society.

 

As you are answering this particular topic, please take into account a very important concept: DeadWeight.

No doubt there are many pros and cons to implementing taxes.- Perhaps some agree that taxes have more advantages vs. disadvantages. Maybe some will disagree. Regardless, consider what happens in terms of the deadweight. Who exactly is affected and why? Consider integrating specific examples to fully justify and validate your points.

 

3. Consider how international trade affect economic well-being.

 4. As you’re considering this discussion topic on externalities, consider simple examples such as pollution, home values and medication. Remember that with the externalities you are external to the situation. In other words, you are not a part of the decision-making process to the end result. Can you consider a personal situation in which he you have been affected positively or negatively? 

5.  If the government implements a fiscal expansionary policy (taxes), we hope that the policies take affect and set out what they were intended to do. But, how do we even know that the policy has in fact been effective?
In other words, what are some signs that the policy works? Or, what signs are not evident (that should be)? – Think about a recent policy that has been implemented into the economy and whether or not it has been effective. What are your thoughts on this? 

 

6. Explain the benefits principle and the ability-to-pay principle.

 

7. What are vertical equity and horizontal equity?

 

8. Why is studying tax incidence important for determining the equity of a tax system?

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