Answer to Question #291635 in Economics for abdulhadi

Question

Explain whether each of the following government activities is motivated by a concern about equality or a concern about efficiency. In the case of efficiency, discuss the type of market failure involved.

A) regulating cable TV prices

B) providing some poor people with vouchers that can be used to buy food

C) prohibiting smoking in public places

D) breaking up Standard Oil (which once owned 90 percent of all oil refineries) into several smaller companies

E) imposing higher personal income tax rates on people with higher incomes

F) instituting laws against driving while intoxicated

Answer 1

A) regulating cable TV prices is about efficiency, the type of market failure involved is monopoly.

B) providing some poor people with vouchers that can be used to buy food is about equality.

C) prohibiting smoking in public places is about efficiency, the type of market failure involved is negative externality.

D) breaking up Standard Oil (which once owned 90 percent of all oil refineries) into several smaller companies is about efficiency, the type of market failure involved is monopoly.

E) imposing higher personal income tax rates on people with higher incomes is about equality.

F) instituting laws against driving while intoxicated is about efficiency, the type of market failure involved is negative externality.