Business Behavior and public policy 1. Define Market power, and then discuss the

Question

Business Behavior and public policy

1.  Define Market power, and then discuss the rationale for government regulation of firms with market power.

Rent Seeking

2.  Explain how rent seeking can lead to a drop in production of goods and services.  What role might the underground economy play in lessening the drop in productive activities?

Offical Poverty Level

3.  Although the poverty rate among single mothers has decreased since 1960, the number of poor children from such families has more than doubled.  Explain

Income Differences

4.  List some reasons why household incomes differ.  Which factors are the most important?

Official Poverty Level

5.  How does the U.S. department of agriculture calculate the official poverty level?  What government assistance programs does the census bureau consider when calculating household income?  What programs are ignored?

Please show all work  Thank You

Explanation / Answer

1) I assume the market power you are referring to is adam smiths invisible hand. The gov believe in using the "artificial hand" to correct the so-called inherent instability of the market.

2) http://ebooks.narotama.ac.id/files/Economics;%20%20A%20Contemporary%20Introduction%20%289th%20Edition%29/Chapter%2016%20Public%20Goods%20and%20Public%20Choice.pdf

3) "Some of the nation%u2019s most influential social theorists, including Gary Becker and William Julius Wilson, have sought to explain the change. These theories have led to a large body of empirical research, but there is still no consensus about why single parenthood spread, much less about why it spread faster in some populations than others." "more than half of all fatherless families are still
created by divorce, separation, death, or imprisonment, and nearly half of all out-of-wedlock births
are now to cohabiting fathers and mothers. " "McLanahan and Sandefur (1994) assembled data from a number of American surveys showing that children who grew up with both of their biological parents performed better on school achievement tests, had fewer children as teenagers, finished high school more often, attended college more often, and earned more in early adulthood. They also showed that only about half of this association was explained by parental income. For our purposes their most important finding was that children raised by both of their biological parents did better than
children raised in any alternative arrangement." "But if children%u2019s social and psychological outcomes depend on whether their biological parents stay together, the trend that should worry us is not the percentage of children living with a lone mother but the percentage not living with both of their biological parents"

4) http://www0.gsb.columbia.edu/faculty/ghubbard/Articles%20for%20Web%20Site/Household%20Income%20Changes%20Over%20Time_Some%20Basic%20Questions%20and%20Facts.pdf

5) http://www.census.gov/hhes/www/poverty/about/overview/measure.html

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