Question: In each case listed below, can you rationalize the government policy on the basis of welfare economics?
a. in Los Angeles, the police respond to 127,000 burglar alarm calls per year. There is no charge. (97 percent of the alarms are false.)
b. Wool and mohair production is subsidized by the federal government.
c. The federal government regulates cherry frozen fruit pies, requiring that at least 25 per-cent of each pie by weight contain cherries and that no more than 15 percent of the cherries be blemished. There are no such regulations for apple, blueberry, or peach frozen pies.
d. In Washington, DC, you cannot become a hairdresser without a license from the city government.
e. The National Energy Policy Act requires that all new toilets flush with only 1.6 gallons of water. Most American homes have toilets that consume 5.5 to 7 gallons per flush.
f. The federal government subsidizes the production of electricity from chicken manure. (Note: We are not making this up.]