KREFT G202 EXAMS SCRIPT QUESTIONS AND
ANSWERS SURE A+
✔✔Productive regulation on sellers - ✔✔cause an inward shift of the supply curve
(decreased supply); the regulation causes sellers to incur higher operating costs
(compliance costs)
✔✔General results of a productive regulation - ✔✔increased prices to buyers
(consumer surplus decreases), decreased prices to sellers (producer surplus
decreases), reduced quantity bought and sold, productive regulations are efficiency
enhancing in markets that are over-producing relative to Qe
✔✔Tax payers/voters are - ✔✔rationally ignorant
✔✔Politicians (elected officials) are - ✔✔vote-maximizers
✔✔Bureaucrats (hired civil servants) are - ✔✔budget-maximizers
✔✔The shortsightness effect - ✔✔politicians support projects that have clearly defined
current benefits and future costs that are difficult to identify; maximized influence on
current voters, at the expense of future generations
✔✔The public sector has no profit motive which - ✔✔reduces the incentive of
bureaucrats to keep costs low
✔✔creative destruction - ✔✔when entrepreneurial change makes older industries or
technologies become obsolete
✔✔Government sometimes chooses to block creative destruction by - ✔✔enacting
policies to protect the dying industries
, ✔✔Uber technology benefits to passengers - ✔✔broader area covered, exact match on
location, price upfront, easy pay, rating system, info upfront, consumer assurance,
cheaper, efficiency, options
✔✔Uber technology benefits to drivers - ✔✔increase productivity, driver assurance,
flexibility, rating system, info upfront, 80% of revenue, own car, larger reach, guaranteed
pay
✔✔Uber competitive advantage - ✔✔tech based reductions in search cost; avoid
regulatory compliance costs; efficient scaling in two-sided market; surge price
✔✔Uber legitimacy - ✔✔political legitimacy and cultural legitimacy (MADD)
✔✔Value of medalion - ✔✔$10 (1973); $1.32 mil (2013); $650,000 (2015)
✔✔Number of taxi cabs in NYC - ✔✔13,566 (1973) to 13,587 (2017); only +21
✔✔Incumbent taxi service - ✔✔Q1<Qe
✔✔Uber case update - ✔✔lobbying costs and court cases costs; 20% of revenue is not
enough to cover the fixed costs of tech development, lobbying, and litigation
✔✔Communal property rights - ✔✔no single power, everyone has access while it lasts;
over-utilization occurs, and no one has incentive to conserve for the future
✔✔Government property rights - ✔✔property decisions made by a small group of
elected political representatives
✔✔Secure private property rights give property owners incentive to: - ✔✔create value
with property (benefit others); maintain property and conserve for the future; innovate
and create new technologies; engage in voluntary exchange
✔✔Patent - ✔✔right to exclude all others from using, producing, or selling an invention
✔✔Trademark - ✔✔a word, name, symbol, or device that is used in trade with goods to
indicate their source (used to distinguish goods from competitors)
✔✔Copyright - ✔✔right to exclude all others from reproducing, distributing, or
performing a work
✔✔Gary Becker's criminal decision rule - ✔✔(1-n)(Yo + G) + (n)(Yo -F)
✔✔Commit crime if - ✔✔EU>U
ANSWERS SURE A+
✔✔Productive regulation on sellers - ✔✔cause an inward shift of the supply curve
(decreased supply); the regulation causes sellers to incur higher operating costs
(compliance costs)
✔✔General results of a productive regulation - ✔✔increased prices to buyers
(consumer surplus decreases), decreased prices to sellers (producer surplus
decreases), reduced quantity bought and sold, productive regulations are efficiency
enhancing in markets that are over-producing relative to Qe
✔✔Tax payers/voters are - ✔✔rationally ignorant
✔✔Politicians (elected officials) are - ✔✔vote-maximizers
✔✔Bureaucrats (hired civil servants) are - ✔✔budget-maximizers
✔✔The shortsightness effect - ✔✔politicians support projects that have clearly defined
current benefits and future costs that are difficult to identify; maximized influence on
current voters, at the expense of future generations
✔✔The public sector has no profit motive which - ✔✔reduces the incentive of
bureaucrats to keep costs low
✔✔creative destruction - ✔✔when entrepreneurial change makes older industries or
technologies become obsolete
✔✔Government sometimes chooses to block creative destruction by - ✔✔enacting
policies to protect the dying industries
, ✔✔Uber technology benefits to passengers - ✔✔broader area covered, exact match on
location, price upfront, easy pay, rating system, info upfront, consumer assurance,
cheaper, efficiency, options
✔✔Uber technology benefits to drivers - ✔✔increase productivity, driver assurance,
flexibility, rating system, info upfront, 80% of revenue, own car, larger reach, guaranteed
pay
✔✔Uber competitive advantage - ✔✔tech based reductions in search cost; avoid
regulatory compliance costs; efficient scaling in two-sided market; surge price
✔✔Uber legitimacy - ✔✔political legitimacy and cultural legitimacy (MADD)
✔✔Value of medalion - ✔✔$10 (1973); $1.32 mil (2013); $650,000 (2015)
✔✔Number of taxi cabs in NYC - ✔✔13,566 (1973) to 13,587 (2017); only +21
✔✔Incumbent taxi service - ✔✔Q1<Qe
✔✔Uber case update - ✔✔lobbying costs and court cases costs; 20% of revenue is not
enough to cover the fixed costs of tech development, lobbying, and litigation
✔✔Communal property rights - ✔✔no single power, everyone has access while it lasts;
over-utilization occurs, and no one has incentive to conserve for the future
✔✔Government property rights - ✔✔property decisions made by a small group of
elected political representatives
✔✔Secure private property rights give property owners incentive to: - ✔✔create value
with property (benefit others); maintain property and conserve for the future; innovate
and create new technologies; engage in voluntary exchange
✔✔Patent - ✔✔right to exclude all others from using, producing, or selling an invention
✔✔Trademark - ✔✔a word, name, symbol, or device that is used in trade with goods to
indicate their source (used to distinguish goods from competitors)
✔✔Copyright - ✔✔right to exclude all others from reproducing, distributing, or
performing a work
✔✔Gary Becker's criminal decision rule - ✔✔(1-n)(Yo + G) + (n)(Yo -F)
✔✔Commit crime if - ✔✔EU>U
