A Special-Interest Issue Is One Whose Passage Yields

question 62

Multiple Choice

A special-interest issue is one whose passage yields

• A) private benefits equal to external benefits.
• B) large external benefits compared to private benefits.
• C) small economic losses to a small number of people and large economic losses to a large number of people.
• D) large economic gains to a small number of people and small economic losses to a large number of people.

Describe the concept of a negative income tax and its purpose.

Understand principles guiding public support for economic policies, like the "veil of ignorance" and its ethical implications.

Recognize programs aimed at reducing economic insecurity and their mechanisms.

Understand the concept of the adverse selection death spiral and its implications for the health insurance market.

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Definitions:

Tax

A compulsory financial charge or levy imposed by a government on individuals or businesses to fund public expenditures.

External Costs

Costs that are not borne by the parties involved in a transaction but rather by third parties or society as a whole.

Efficient Solution

An outcome wherein resources are allocated in the most effective way, maximizing benefits while minimizing costs or wastes.

Internalize Externalities

The process by which a firm takes into account the external costs or benefits of its activities, typically by incorporating them into its pricing structure.