Identify each of the following government programs as efforts to correct market failure, to promote or discourage the consumption of merit or demerit goods, or to transfer income.

Public Broadcasting System (PBS) stations regularly solicit contributions from viewers. Yet only about 11% of these viewers, who on average have much higher incomes than the rest of the population, ever contribute. Why?

Do you expect to benefit from the research efforts sponsored by the American Cancer Society? Do you contribute? If you answered “Yes,” then “No,” does this make you a free rider?

Suppose the population of the United States increases. What will happen to the demand for national defense? What will happen to the efficient quantity of defense?

How could a program that redistributes income from rich to poor be considered a public good?

We noted that local governments typically supply tennis courts but not bowling alleys. Can you give a public choice explanation for this phenomenon? How about a public interest explanation?

Find out the turnout at the most recent election for student body president at your school. Does the turnout indicate student apathy?

Some welfare programs reduce benefits by $1 for every $1 that recipients earn; in effect, this is a tax of 100% on recipient earnings. Who pays the tax?

Suppose the quality of elementary education is a public good. How might we infer the demand for elementary school quality from residential property values?

V.I. Lenin, founder of the former Soviet Union, wrote that “the State is a machine for the oppression of one class by another.” Explain whether Lenin’s view typifies the public interest or the public choice school of public sector choice.

Sugar prices in the United States are several times higher than the world price of sugar. This disparity results from a federal government program that keeps enough foreign-produced sugar out of the United States to hold U.S. sugar prices at a high level. The program raises the price of all sweetened foods produced in the United States; it boosts food costs for the average household by more than a hundred dollars per year. Who benefits from the program? Why do you suppose it exists?

The table on federal income tax rates facing various income groups suggests that the marginal tax rate in the United States has fallen since the 1993–1996 period used in the study of marginal tax rates and labor supply discussed in the Case in Point essay. What would your prediction be as to how this reduction in the marginal tax rate would affect the quantity of labor supplied in the United States?

Given that we cannot have a perfectly accurate count of the votes in any election, is there any point in having elections at all?

In an effort to beautify their neighborhood, four households are considering leasing a small section of vacant land for a park. For a monthly leasing fee, the owner of the vacant land is willing to arrange for some of the maintenance and to make the park available only to the four households. The demand curves for the four households (A, B, C, and D) wanting parkland are as follows (all demand curves are linear):

Draw the demand curves for the four neighbors, and show the neighborhood demand curve for parkland.

Suppose the owner of the vacant land will provide for and maintain a neighborhood park at a fee of $125 per acre; the neighbors may lease up to 5 acres of land per month. Add this information to the graph you drew in Problem 1, and show the efficient solution. Are the neighbors likely to achieve this solution? Explain the problems involved in achieving it.

The perfectly competitive blank compact disc industry is in long-run equilibrium, selling blank discs for $5 apiece. Now the government imposes an excise tax of $2 per disc produced.

A monopoly firm has just taken over the blank compact-disc industry. There have been technological advances that have lowered production cost, but the monopoly firm charges a price greater than average total cost, even in the long run. As it turns out, the firm is still selling compact discs for $5. The government imposes an excise tax of $2 per disc produced.

The following hypothetical data give annual spending on various goods and services for households at different income levels. Assume that an excise tax on any of these would, in the long run, be shifted fully to consumers.

Determine whether a tax on any of the following goods would be progressive, proportional, or regressive.