4. Discuss whether state or market solutions to development problems are preferable by evaluating whether these statements are true or false. Use production function specifications (such as a Solow model with two types of capital) and graphs to prove your points. Give examples in African countries of good and bad policies and outcomes to illustrate your arguments in a through d. a. Markets get the desirable allocation right when all inputs to production are private goods and there is perfect competition. b. It is desirable that the government allow Free Trade rather than kill trade off with punitive taxes and controls. c. State intervention is needed when some inputs to production are public goods (give the definitions explaining how public goods differ from private goods). d. Whether market solutions are preferable to state intervention in a particular case depends on whether private payoffs and social payoffs are aligned.
4. Discuss whether state or market solutions to development problems are preferable by evaluating whether these statements are true or false. Use production function specifications (such as a Solow model with two types of capital) and graphs to prove your points. Give examples in African countries of good and bad policies and outcomes to illustrate your arguments in a through d.
a. Markets get the desirable allocation right when all inputs to production are private goods and there is perfect competition.
b. It is desirable that the government allow Free Trade rather than kill trade off with punitive taxes and controls.
c. State intervention is needed when some inputs to production are public goods (give the definitions explaining how public goods differ from private goods).
d. Whether market solutions are preferable to state intervention in a particular case depends on whether private payoffs and social payoffs are aligned.
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