Question 1: Provide the rationale(s) for market intervention in the context of a policy that subsidizes the purchase of an electric (“green”) vehicle.

Question 2: Consider a policy that raises the minimum wage (i.e. the price of “unskilled” labor). Provide the rationale(s) for such a type of market regulation.

Question 3: Explain whether you agree or disagree with the following statement, and why:

“When there is a negative consumption externality for a good, the price that leads to an efficient level of consumption is higher than the price that would result from an unregulated private market.”

Question 4: Explain whether you agree or disagree with the following statement, and why: “Variation across individuals in rates of time preference is one possible explanation for the observed correlations between smoking, education levels and health levels.”

Question 5: What are the assumptions in the standard model of health capital about the costs of health care? Are there are additional individual-level costs, possibly non-monetary, for acquiring health care that are not captured in the standard model?

Question 6: Explain whether you agree or disagree with the following statement, and why: “Regulations that prohibit people from obtaining certain medications except by physician prescription are most likely a response to informational asymmetry.”