Read the literature provided and answer the first six questions in short answers. The last question (question 7) should be answered in essay form.
1- From the start, Stiglitz details a broad range of governmental services that influence
activities of individuals in society. Point out any of these activities as provided by a
government that would have a negative effect on consumers.
2- Contrast Stiglitz’s description of the United States as a “mixed economy” in relation to public economic activities undertaken by other countries.
3- Identify four (4) factors that lead to government failures and four (4) factors that lead to market failures. As such, what effect does the implementation of public (government) policy have on outcomes i.e., consequences?
4- According to Stiglitz, there are two (2) important differences between public and private institutions. Describe those two (2) differences. Then, identify a powerful legal tool(s) that the government possesses to control the private sector.
5- In your view, based on this reading, name five (5) very important public services that should be provided by the government rather than being performed by the private
sector.
6- In one or more of the following programs, identify one (or more) that may
result in “unintended consequences:”
-Rent control
-Minimum wage
-Medicare
-Improved highways making suburbs more accessible to the city
-Forced integration of inner city schools
-Raising a speed limit to 65 an hour to save on fuel
7- ESSAY: The Public Sector and Basic Economic Questions
As for field of public
economics, society expects policy makers to make choices as how scarce public
resources are to be allocated. Policy decisions are complex. Stiglitz provides the student with four questions as to how government should decide how these choices should be
allocated and how the choices will affect societal outcomes in the public sector.
Describe the four (4) questions described by Stiglitz and, in your view, what is the extant of the value of collective choices in deciding which choices to pursue? In context, collective choices (social choices) are the choices as to consumption that society must decide together in a democratic society. Then, who benefits from a collective driven policy
decision?
