PADM 5006 Final Exam Fall 2001

Use separate sheets of paper as needed to answer. Please be sure to put your name on your answer sheets and the number of the question you are answering. When done staple all your answer sheets and your exam together and hand them in.

Please explain your responses.

1. Alice says: We should require by law that everyone get a flu vaccination. Flu vaccinations save lives and promote the public health. Life and health are infinitely valuable so we must do everything possible to get everyone vaccinated. Besides over half of all healthcare expenditures come from government funds so this will save resources in the long run since fewer people will need treatment for the serious versions of this illness that can arise.

Bob says: Freedom is what’s infinitely valuable, including freedom from meddlesome laws and needles. Any government intervention is completely unjustified. Viva “Laissez faire”!

a) Comment on any problems you see to each side’s analysis thus far.

b) Suggest an alternative proposal to Alice & Bob’s views that you might consider.

c) If you were to do a benefit cost analysis of your proposal, what additional kinds of information would you want?

d) Once you have the information you would use in a benefit cost analysis how would you handle benefits and costs that occur in different periods of time?

2. Which of the following would you classify as a public good or private good? Briefly, why?

a) War memorial plaque for a local park

b) Public health clinic

c) Chocolate almond crunch

d) National Defense

e) Textbook

f) Holiday tree in Rockefeller Plaza

g) NBC World Series Baseball broadcast

h) Yosemite Falls

i) Highway

j) Clothing

3. Recently California’s Regional Water Quality Control Board decided to sue Tuolumne County, Tuolumne’s Board of Supervisors, and “a long list of mining companies and people” because of the water pollution caused by the Jamestown Mine (Elliott, Modesto Bee, 12/17/01). Why might it be desirable for the government to be involved in this issue? (Hint: please relate this issue to the Coase Theorem.) How could public policy be used to reduce the level of pollution? What are some of the advantages and disadvantages of alternative approaches?

Is there an implication in terms of what level of government is appropriate for different activities?

4. Suppose someone suggests: "Only people with high incomes buy lobster, therefore we should tax lobster. That way the tax will be fair since it will fall on those with the greatest ability to pay. It will also be efficient since lobster is perishable and so people won’t drive long distances to avoid the tax.” Discuss this idea. Please include definitions of the key terms used in your arguments.

5. What’s the difference between the economic justifications for social insurance programs such as Medicare and Unemployment insurance versus social redistribution programs such as TANF and Food Stamps?