Download EXAMPLE OF A DOMESTIC POLICY ANALYSIS FOR FINAL EXAM

EXAMPLE OF A DOMESTIC POLICY ANALYSIS FOR FINAL EXAM1
1.
This analysis addresses the following question: “Do subsidies to sugar producers
increase society’s happiness?”
A.
What kind of government intervention would this represent (choose from
Subsidy, Tax, Quota, Mandate)?
________________________________________
B.
Fill in the Profit Table below to illustrate the effect of this government
intervention on society’s happiness.
Before Intervention
After Intervention
BENEFIT:
-------------------------------------------------------------------------------------------REVENUE:
COST:
_____________________________________________________________
PROFIT:
C.
The Profit Table above shows the Revenues, Costs, and Profits for what kind of
firm?
D.
Who are the winners from the resource transfer represented on the Revenue line
of the Profit Table above? Briefly elaborate why they are “winners.”
E.
Who are the losers from the resource transfer represented on the Cost line of the
Profit Table above? Briefly elaborate why they are “losers.”
1
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“http://faculty-staff.ou.edu/R/William.R.Reed-1/Courses/ECON_5612/index.html” .
*F.
Briefly describe the externality that, in your opinion, provides the best
justification for government intervention in this market.
*G.
Identify the group of consumers who constitute the “third party” affected by this
resource transfer.
H.
Looking only at the resource transfer represented in the Profit Table above, and
using the numbers you came up with, what is the net impact on society’s happiness
of the government intervention for this resource transfer? In other words, by what
dollar amount does the intervention change society’s happiness? (Write your
numerical answer on the line below. Be sure to indicate whether the intervention
would increase or decrease society’s happiness by including a “+” or “ –“ with
your numerical answer.)
The net change in society’s happiness = _________________
I.
Answer the following question: “Do subsidies to sugar producers increase
society’s happiness?” Circle the answer below that represents what you really
think.
YES
J.
NO
In the space below, elaborate on why you are in favor or against this government
intervention. Your task here is to present a thoughtful defense of your opinion,
whatever it may be.