Podcast
Questions and Answers
What is a likely unintended consequence of raising the minimum wage to €25 per hour?
What is a likely unintended consequence of raising the minimum wage to €25 per hour?
What is an unintended consequence of implementing rent controls that restrict rent to €50 per month?
What is an unintended consequence of implementing rent controls that restrict rent to €50 per month?
What is a possible unintended effect of raising the petrol tax by €1.00 per litre?
What is a possible unintended effect of raising the petrol tax by €1.00 per litre?
What is a likely unintended consequence of making drugs illegal?
What is a likely unintended consequence of making drugs illegal?
Signup and view all the answers
What unintended consequence might arise from prohibiting the killing of a rare bird of prey?
What unintended consequence might arise from prohibiting the killing of a rare bird of prey?
Signup and view all the answers
What is a possible unintended result of banning sugar imports from South America to aid local sugar beet growers?
What is a possible unintended result of banning sugar imports from South America to aid local sugar beet growers?
Signup and view all the answers
If Susan chooses university over working full-time, what is the opportunity cost of her decision?
If Susan chooses university over working full-time, what is the opportunity cost of her decision?
Signup and view all the answers
What does opportunity cost represent in economic terms?
What does opportunity cost represent in economic terms?
Signup and view all the answers
Study Notes
Chapter 1: Incentives and Public Policy
- People respond to incentives; government policy can alter these incentives and thus behaviour
- Public policy can have unintended consequences, producing results different from what was anticipated
Minimum Wage
- Increasing the minimum wage to €25 per hour can lead to unemployment.
- Many workers might want to work at that wage, but fewer businesses would hire them, due to their lower productivity compared to the wage increase
- This could lead to job losses for those with low productivity
Rent Controls
- Government-imposed rent controls, setting maximum rent at €50 per month, can lead to a shortage of housing.
- Many renters would want to rent at low (€50) prices, but there are not enough landlords able to offer this to meet demand
- This can lead to a lack of housing for those able to afford apartments
Petrol Tax
- Increasing the petrol tax by €1.00 per liter can reduce petrol consumption.
- This reduction in consumption can lead to a lower number of accidents, less wear on roads and cars, and decreased demand for cars and roadside repairs
Drug Prohibition
- Outlawing drugs can lead to increased drug-related crime (gangs and organized crime).
- This increase in crime occurs due to elevated prices created from decreased supply, making drug-dealing more lucrative
Protecting Endangered Species
- Prohibiting the killing of a rare bird of prey, and the collecting of its eggs, to increase the population of the species may lead to a decrease in other animal populations that are the species' food source
Agricultural Trade Restrictions
- Banning sugar imports from South America to protect European sugar beet growers can cause problems for South American growers.
- South American farmers may struggle to repay debts to EU banks as they shift to less profitable crops like coca leaves and marijuana due to the ban
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Explore the fundamental concepts in Chapter 1 regarding how incentives influence behavior and the unintended consequences of public policies. This quiz delves into examples like minimum wage, rent controls, and petrol taxes, highlighting their potential impacts on society and the economy.
