Why Does Dealing with the Policy Challenges of Medicare and Social

question 8

Multiple Choice

Why does dealing with the policy challenges of Medicare and Social Security create a prisoner's dilemma?

• A) The benefits awarded by these programs are not regulated in any way, so seniors consume a large share of the federal economy.
• B) The transaction costs of reaching a deal are high because there are so many actors who will want to be involved.
• C) Finding a focal point to start the discussions is a very real challenge and with neither side knowing where to start the conversation.
• D) Each side knows that they could benefit from reaching a landmark entitlement reform deal if they could just trust the other side to cooperate.

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Definitions:

Demand for Trees

The consumer desire or market requirement for trees, whether for lumber, paper products, or environmental benefits.

Demand for Paper Products

The total quantity of paper goods consumers are willing and able to purchase at various prices.

Elasticity

A measure of how much the quantity demanded or supplied of a good or service changes in response to a change in its price.

Price of a Resource

The monetary value assigned to a raw material, energy, or other fundamental inputs used in the production of goods and services.