Public Finance and Public Choice

2. The Role of Government in a Market Economy

2.2. Answers to Try It! Problems

  1. This is an attempt to deal with monopoly, so it is a response to imperfect competition.
  2. Cigarette consumption may result from an irrational decision.
  3. Protecting the earth from such a calamity is an example of a public good.
  4. Food Stamps are a means-tested program to redistribute income.
  5. Social Security is an example of a non-means-tested income redistribution program.
  6. This is a response to external costs.
  7. This is a response to monopoly, so it falls under the imperfect competition heading.