1) Some individuals see national defense spending as benefiting special interest
ID: 1204700 • Letter: 1
Question
1) Some individuals see national defense spending as benefiting special interests— in particular, the defense industry. Others see it as directly benefiting not only the defense industry but the general public as well. Does this same difference in view exist for issues other than national defense? Name a few.
2) One prediction made in the chapter was that “the owner of a car repair shop in a small will be more careful not to overcharge customers than the owner of a car repair shop in a large city? Why?
3) The quality of the school district can affect house prices in that district. If this statement is true, what should we observe?
4) Under what condition might persons buy more of something than the efficient amount for them to buy?
Explanation / Answer
1) The given case is related to positive externality whereby the positive spillovers are spread and not limited to the creator. Education is another sector where positive externality allows the educator or creator to spread the knowledge what it has acquired.
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