Rent seeking and how does it differ from the kinds of profit maximization and profit

/in /by

Week 6 Homework Assignment

BA 206: Microeconomics

 

Name_________________________________________________________________

 

Instructions: Please answer each question with sufficient detail. Relevant detailed responses are highly rewarded. If you consult any sources, then you should provide both in-text citations and reference at the end for each response. You need to make sure at least consult your textbook for your responses, and cite the textbook using APA format.

 

  1. What are the two characteristics of public goods? Explain the significance of each for public provision as opposed to private provision. What is the free-rider problem as it relates to public goods? Is the U.S. Border Patrol a public good or a private good? Why? How about satellite TV? Explain. (25% of grade)

 

 

  1. The LoJack car recovery system allows the police to track stolen cars. As a result, they not only recover 90% of LoJack-equipped cars that are stolen but also arrest many auto thieves and shut down many “chop shops” that take apart stolen vehicles to get at their used parts. Thus, LoJack provides both private benefits and positive externalities. Should the government consider subsidizing LoJack purchases? (25% of grade)

 

 

  1. Distinguish between a carbon-tax and a cap-and-trade strategy for reducing carbon dioxide and other so-called greenhouse gases (that are believed by many scientists to be causing global warming). Which of the two strategies do you think would have the most political support in an election in your home state? Explain your thinking. (25% of grade)

 

 

  1. What is rent seeking and how does it differ from the kinds of profit maximization and profit seeking that we discussed in previous chapters? Provide an actual or hypothetical example of rent seeking by firms in an industry. By a union. By a professional association (for example, physicians, schoolteachers, or lawyers). Why do elected officials often accommodate rent-seeking behavior, particularly by firms, unions, and professional groups located in their home states? (25% of grade)