ECO320 midterm 1 Exam 2025
Questions and Answers
Should efficiency be the only value that matters to making law and applying it? -
ANSWER-• Not always leads to an equitable outcome
• For law efficiency should be the only thing that matters because there is a large
amount of variation of what people think is fair, as efficiency can be measured
• Argument 1: Fairness comes at the expense of individual wellness (progressive
taxes, rent controls)
• argument 2: individuals that would thought to benefit from a law often are the
victims of that same benefit (again rent control, because your better off if you
already have one but if you are looking for an apt you pay more)
What other policy values should matter to making law and applying it - ANSWER-
- income, wealth, consumption, contractual activity, property owned, harm caused,
harm suffered are all imperfect signals of individuals.
Using economic analysis what is the most optimal way to change a law - majority
vote? Court decisions by judges? - ANSWER-- single judge is more likely to come
to a optimal decision. lower costs and more timely
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
, - individual preferences can come into play, juries are the group option
Define and distinguish between productive efficiency and allocative efficiency -
ANSWER-• Productive: the production decisions of a firm and the supply side of
the market. Knowledge and control over resources and minimizing costs of selling
the goods and obtaining them, moving resources to less productive to more
productive.
• Allocative (redistributive): the buying decisions of consumer and the firms,
focused on the demand side of the market. Minimizing the transaction costs of
transmitting information, (how much you value a good, what are you willing to
pay) lowest cost production, moves wealth to the less informed party to the well
informed party.
A non-voluntary transaction never increases utility. True or False. - ANSWER-
FALSE: goods that are acquired through voluntary exchange are guaranteed to
make both parties better off (coase theorem)
With the coming legalization of marijuana on October 17, 2018, should the
smoking of marijuana be regulated the same way as cigarettes? How could the
government apply cost benefit analysis? What are the issues? - ANSWER-- both
cause negative health externalities
- grey markets, perfect substitutes in legal and illegal markets
- if cigg market is regulations are optimal, so could weed market
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
Questions and Answers
Should efficiency be the only value that matters to making law and applying it? -
ANSWER-• Not always leads to an equitable outcome
• For law efficiency should be the only thing that matters because there is a large
amount of variation of what people think is fair, as efficiency can be measured
• Argument 1: Fairness comes at the expense of individual wellness (progressive
taxes, rent controls)
• argument 2: individuals that would thought to benefit from a law often are the
victims of that same benefit (again rent control, because your better off if you
already have one but if you are looking for an apt you pay more)
What other policy values should matter to making law and applying it - ANSWER-
- income, wealth, consumption, contractual activity, property owned, harm caused,
harm suffered are all imperfect signals of individuals.
Using economic analysis what is the most optimal way to change a law - majority
vote? Court decisions by judges? - ANSWER-- single judge is more likely to come
to a optimal decision. lower costs and more timely
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
, - individual preferences can come into play, juries are the group option
Define and distinguish between productive efficiency and allocative efficiency -
ANSWER-• Productive: the production decisions of a firm and the supply side of
the market. Knowledge and control over resources and minimizing costs of selling
the goods and obtaining them, moving resources to less productive to more
productive.
• Allocative (redistributive): the buying decisions of consumer and the firms,
focused on the demand side of the market. Minimizing the transaction costs of
transmitting information, (how much you value a good, what are you willing to
pay) lowest cost production, moves wealth to the less informed party to the well
informed party.
A non-voluntary transaction never increases utility. True or False. - ANSWER-
FALSE: goods that are acquired through voluntary exchange are guaranteed to
make both parties better off (coase theorem)
With the coming legalization of marijuana on October 17, 2018, should the
smoking of marijuana be regulated the same way as cigarettes? How could the
government apply cost benefit analysis? What are the issues? - ANSWER-- both
cause negative health externalities
- grey markets, perfect substitutes in legal and illegal markets
- if cigg market is regulations are optimal, so could weed market
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
