PART I
Directions: Please answer the questions below. Your response to each question must be at least one paragraph in length. Explain your thoughts with theory and examples where applicable.
1. For each of the following, determine whether it is a private good, public good, common resource, or a club good.
a. Congested toll roads
b. Knowledge
c. Fish in the ocean
d. National defense
e. Congested non-toll roads
f. Cable TV
g. The environment
h. Fire protection
i. Ice-cream cones
j. Uncongested toll roads
k. Clothing
l. Uncongested non-toll roads
2. The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the U.S. government correct for this apparent market failure?
3. Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?
4. Identify the three most important expenditure programs of the federal government. Explain how they differ from the three most important expenditure programs of state and local governments? Explain why it makes sense for the federal government to purchase "national defense" rather than state governments.
5. Why are Pigovian (corrective) taxes preferred to regulatory policies as methods to remedy negative externalities?
PART II: Midterm Project
Please view Income Inequality and the Middle Class (http://www.youtube.com/watch?v=5kwA-CwFK5A), which is a seven minute video from Paul Krugman, the author noted in Module 2.
This video is about income inequality and the middle class. Within the context of the work you have done thus far in this course, determine whether or not you agree with his argument. Write a position paper that is at least three pages in length and utilizes APA format. You must use proper APA citations to cite the references that you use to explain your opinion.
Next, compose an essay that is one page in length in which you elaborate on how you see the policies of the last presidency impacting the outcomes indicated. Be sure to cite your sources. Once you have completed this part, your Midterm Project will be a total of four pages in length.
Please utilize the LIRN library to help you get started with your research. You may visit the Academic Resource Center for a guide on how to utilize LIRN successfully and for APA guidelines.