Question 1. Chapter 18, Problem 8 (1 point)

1. Chapter 18, Problem 8 (1 point)
Chapt 7 argued that private provision of public goods is inefficiently low, and that subsidization can help attain the optimal level of public goods. Why might offering tax breaks for public goods provision be an inefficient method bringing about this goal?

2. Chapter 19, Problem 1 (1 point)
Why do most analysts assume that payroll taxes in the US are borne by workers rather than employers?

3. Chapter 19, Problem 5 (1 point)
The government is considering imposing taxes on the sellers of certain classes of products. The first tax they are considering is a tax on 2% milk. The second is a tax on all dairy products. The third is a tax on all food products. Which of these three taxes would you expect to have the largest impact on the sticker prices of the taxed products?

4. Chapter 20, Problem 6 (1 point)
The city of Johnstown decides to build a new stadium to attract a basketball tea from the city of
Rosendale. One economic advisor suggests that the stadium should be financed by a 2 year sales of 10%, while another advisor suggests that the stadium should be financed with a 20 year sales tax of 1%. Assume that the interest rate is zero. What approach will yield a more efficient outcome? Why?

5. Chapter 12, Problem 4 (1 point)
Small companies typically find it more expensive, on a per employee basis to buy health insurance for
their workers as compared with larger companies. Similarly it is less expensive to obtain health insurance through an employer provided plan than purchasing it directly from an insurance company, even if your employer requires you to pay the entire premium. Use the ideas from the chapter to explain these observations.

6. Chapter 12, Problem 10 (1 point)
Describe the dimensions along which moral hazard can exist. Can you think of ways in which the
government can reduce the prevalence of moral hazard along each dimension>