Gallaway
ECO 515
Spring 200
5

Homework #2

All homework should have a cover page indicating the student's name, class, and row number. All homework assignments should be typed.  Math  and graphs can be handwritten if done very neatly. You may work in groups.  See the syllabus for relevant guidelines. You do not need to answer the red parts of the questions, but you should spend some time thinking about them.

(I suggest you cut and paste these questions into a Word document and then start from there.)

 

  1. Suppose there are five people, numbered 1 - 5, who rank four projects, A -D, as follows:

1 2 3 4 5
A A D C B
D C B B C
C B A D D
B D C A A

Will any of these projects be chosen by majority vote rule?  Why or why not. In your answer, you should plot each persons preferences as shown in figure 6-2.

  1. Do Chapter 7 Discussion Question #2,  a & b from page 163 of your book.

  2. Do Chapter 7 Discussion Question #4 from page 163 of your book.

  3. What is the difference between a price and a Lindahl price?

  4. What is Arrow's Impossibility Theorem?  What are the 6 criteria discussed by arrow?

  5. Explain how a simple utilitarian model could be used as an argument for a radically even distribution of income.

  6. Explain Rawl's use of the maximin criterion in   examining the appropriate distribution of income.  What are the assumptions of Rawl's model?  What are its implications?

  7. Compare the work incentives  and state control of the old AFDC to those of  TANF.

  8. What is adverse selection?  Why might adverse selection create a need for the government to be involved in the provision of insurance?

  9. In distributional terms, who are some of the winners and losers of Social Security as it is currently structured?

  10. Discuss some pitfalls, or "games," of cost-benefit analysis.