Q1. "What is the appropriate balance between private and public (i.e., government) activity? Think of a case where the government has intervened (or it was suggested that government intervene) in a previously private market (e.g. Chrysler, the airline industry, tariffs on Japanese luxury cars etc). What other examples can you think of? By means of a marginal cost analysis or, support or marginal benefit argue against the intervention.

Q2. An intraocular lens manufacturing is in the qualification process of a polishing machine. The grinder will be qualified only if the percentage of polished lenses that contain surface defects does not exceed 1.5%. A sample of 350 lenses and found 5 lenses with surface defects. Formulate an appropriate test for the qualification of the polishing machine using an α = 0.05.