1) Name a good with a negative externality. What is the external cost? Will a free market for this good provide too much or too little to be allocatively? how can the government ensure an optimal amount to the good is produced?
2) Consider broadband internet. Answer the following:
a) is the service excludable? Explain
b) is the service rival? Explain
c) based on your previous answers, is the service a public good? Explain
3)Adverse selection problem are types of information problem where one side of the market (usually buyers) do not have as much information as sellers and are therefore less willing to take risks on goods. Is there any way that private firms can help reduce the adverse selection problem? Can you think of an example of such a solution? under what circumstances might private firms be unable or unwilling to solve these problems? explain your answer.
4) There is an argument that the internet has made the dissemination of information so cheap and easy that the news has become a public good. Do you agree with this idea? why or why not? if news is a public good( or if it is similar to a public good), what are the potential problem with our current journalism market(where private companies gather and report the news)? is there a role for the government is reporting the news? Are there concerns with the government reporting the news? Explain.
5) There are several government programs associated with reducing poverty. Are there positive externalities associate with reducing poverty? If so, what are they? Do you think the externalities are large enough to economically justify our current attempts or even more intense efforts to fight poverty? Explain
6) the federal government insures bank deposits. this is meant to create stability in the banking system. how might it create moral hazard?
7) how might information asymmetry reduce market efficiency? offer an example of a market that seems inefficient because of inadequate information?