Question : 6.5   Are Markets Fair? 1) The “equality of opportunity” idea of : 1226498

6.5   Are Markets Fair?

1) The “equality of opportunity” idea of fairness claims

A) a society should make the poorest as well off as possible.

B) the results and the rules should both be fair.

C) it’s not fair if the rules aren’t fair.

D) private property can be transferred under government order.

E) only a first-come, first-served system of allocating resources is fair.

2) Assume the Nozick rules are being followed in the economy so that the distribution of income is fair. What must be true for this to create an efficient allocation of resources?

A) All people are earning equal incomes.

B) There are no public goods, monopolies, high transactions costs, or external costs and benefits.

C) The costs of administering redistribution equals the benefits the poor receive.

D) The government must redistribute income in a fashion that minimizes the “big tradeoff.”

E) The government must allocate resources using a command mechanism.

3) An unequal distribution of income is considered fair according to Robert Nozick if

A) marginal cost equals marginal benefit.

B) the cost of administering a welfare system is minimized.

C) property rights are enforced and voluntary exchange occurs.

D) the economy is producing its maximum total output.

E) resources are allocated using the command method.

4) Which of the following is most closely related to the “fair results” approach to fairness?

A) efficient resource use

B) having an equal income distribution

C) voluntary exchange

D) the command system of allocating resources

E) price hikes in a natural disaster

5) Outcomes are fair according to the

A) rules view if private property rights are established and trade is voluntary.

B) results view if private property rights are established and trade is voluntary.

C) rules view if there is not too much inequality.

D) results view if there is not a big tradeoff.

E) results view if there is equality of opportunity.

6) The “big tradeoff” refers to

A) producing capital goods instead of consumable goods.

B) marginal benefit versus marginal cost.

C) efficiency and fairness.

D) taking an economics course instead of some other course.

E) using market prices rather than a command system to allocate resources.

7) The idea of the “big tradeoff” points out the costs of

A) using a results approach to fairness when the rules approach is correct.

B) transferring income using taxes that decrease efficiency.

C) price hikes during natural disasters.

D) using a rules approach to fairness when the results approach is correct.

E) None of the above answers is correct.

8) When economists use the term “big tradeoff” when discussing efficiency they are referring to the tradeoff between

A) external costs and external benefits.

B) marginal cost and marginal benefits.

C) producer surplus and consumer surplus.

D) efficiency and fairness.

E) deadweight loss and producer/consumer surplus.

9) Which of the following is true for taxes? They

A) are always administered fairly.

B) are a necessary part of living in an economy with a fair distribution of income.

C) are always administered without creating unfairness or inefficiency.

D) are an involuntary transfer of private property.

E) do not create a big tradeoff problem.

10) Which of the following is part of the cost of income transfers?

A) Tax-collecting agencies cost money to administer.

B) Taxing incomes encourages people to work harder.

C) Income transfers make the results more unfair.

D) Income transfers increase the size of the economic pie.

E) Income transfers are a similar to allocating resources using a lottery.