Decisions for Tomorrow The following production possibilities curve shows the trade-off between housing and all other goods.All Other Goods (units per year)YesNoProduction Possibilities CurveBCDYesNoEGHHousing (units per year)a. If the market mix of output is at point A and the optimal mix of output is at point D, does a market failure exist?PPCb. If the government has a laissez-faire approach, will it intervene?YesNoc. If the government intervenes and the economy moves to point C, is this a government failure?YesNod. Suppose a politician has self-interest to keep the current mix of output despite need for more housing in her district. If this is thecase, and based on your knowledge of public choice theory, will the politician intervene?

Production possibility curve shows the combination of two goods that are produced with efficient…

Decisions for Tomorrow The following production possibilities curve shows the trade-off between housing and all other goods. Production Possibilities Curve All Other Goods (units per year) Yes No C D E Yes No H Housing (units per year) a. If the market mix of output is at point A and the optimal mix of output is at point D, does a market failure exist? Yes O No b. If the government has a laissez-faire approach, will it intervene? PPC c. If the government intervenes and the economy moves to point C, is this a government failure? Yes No d. Suppose a politician has self-interest to keep the current mix of output despite need for more housing in her district. If this is the case, and based on your knowledge of public choice theory, will the politician intervene?

Decisions for Tomorrow The following production possibilities curve shows the trade-off between housing and all other goods. Production Possibilities Curve All Other Goods (units per year) Yes No C D E Yes No H Housing (units per year) a. If the market mix of output is at point A and the optimal mix of output is at point D, does a market failure exist? Yes O No b. If the government has a laissez-faire approach, will it intervene? PPC c. If the government intervenes and the economy moves to point C, is this a government failure? Yes No d. Suppose a politician has self-interest to keep the current mix of output despite need for more housing in her district. If this is the case, and based on your knowledge of public choice theory, will the politician intervene?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter3: Scarcity, Trade-offs, And Production Possibilities

Section: Chapter Questions

Problem 7P

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