Key Economic Concepts

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Questions and Answers

What does the First Welfare Theorem state about deviations from competitive equilibrium?

They result in increased market efficiency.

They enhance distributive fairness.

They lead to deadweight loss. (correct)

They create more competitive markets.

Which type of fairness aims to maximize the sum of utilities?

Procedural Fairness

Egalitarian Fairness

Utilitarian Fairness (correct)

Distributive Fairness

Which statement best describes the trade-offs between fairness and efficiency?

Efficiency and fairness are usually unrelated concepts.

Fairness goals always lead to higher efficiency losses.

There can be efficiency losses from pursuing fairness goals. (correct)

Pursuing fairness often improves market efficiency.

What is procedural fairness concerned with?

The morality of the rules governing the process. Signup and view all the answers

Which of the following is an example of group fairness?

Salary increases for women due to previous wage gaps. Signup and view all the answers

What does moral philosophy primarily focus on?

Absolute principles and rules of behavior. Signup and view all the answers

In context of market failures, what role does government policy typically play?

It should analyze substantive areas subject to market failures. Signup and view all the answers

Which ethical theory focuses on the aggregation of costs and benefits?

Utilitarianism Signup and view all the answers

What is a major factor contributing to the severity of open-access problems?

Inadequate institutions in countries Signup and view all the answers

What is Hartwick's Rule aimed at achieving?

Maintaining citizens' quality of life after resource depletion Signup and view all the answers

Which fund is an example of managing resource extraction revenues for future benefit?

Norway's Government Pension Fund Global Signup and view all the answers

What is the primary concept behind comparative advantage?

Lower opportunity cost in production than other countries Signup and view all the answers

Which of the following is NOT a common import-restricting policy?

Subsidies Signup and view all the answers

What effect does reducing trade barriers generally have on domestic producers?

Greater exposure to foreign competition Signup and view all the answers

In the context of imperfectly competitive markets, what is a likely outcome of increased competition?

Reduction in prices Signup and view all the answers

What is the primary goal of competition policy in Canada?

To maintain and encourage competition Signup and view all the answers

What type of regulation can be considered as 'disguised protection' in trade policies?

Consumer health and safety regulations Signup and view all the answers

Which resource management model allows local groups to sustainably manage resources without central command?

Insider group norms and rules Signup and view all the answers

Which entity handles the criminal code violations related to competition law in Canada?

Attorney General Signup and view all the answers

Which of the following is NOT a normative rationale for trade policy?

Maximizing market efficiency Signup and view all the answers

In terms of competition law, what does collusion primarily involve?

Agreements between competitors to manipulate market prices Signup and view all the answers

What is the burden of proof in civil code violations adjudicated by the Competition Tribunal?

Balance of probabilities Signup and view all the answers

Which assumption applies to a small importing country in perfect competition regarding foreign supply?

It is perfectly elastic Signup and view all the answers

Which of the following is typically a result of imposing tariffs in a perfectly competitive market?

Higher domestic prices Signup and view all the answers

What was the main reason the Haida nation challenged the transfer of TFL?

The transfer was made without consent. Signup and view all the answers

What did the court decide regarding the Crown's duty to consult Indigenous Nations?

The Crown failed to fulfill this constitutional duty. Signup and view all the answers

What was the purpose of the Royal Proclamation of 1763?

To prevent frauds and abuses by settlers against Indigenous Peoples. Signup and view all the answers

Which section of the Constitution Act of 1982 protects Aboriginal rights?

Section 35 Signup and view all the answers

What was the outcome of the court's ruling on the requests for injunctions from Gitxaala and Ehattesaht?

The court dismissed the requests for injunctions. Signup and view all the answers

What does the 'Honour of the Crown' mandate in treaties?

The Crown must uphold its obligations with honour. Signup and view all the answers

What does the term 'externality' refer to in the context of environmental policy?

A non-priced effect on one agent resulting from another's activities. Signup and view all the answers

According to the content, what usually happens to activities with negative externalities?

They are carried out at a level that is too high from a social perspective. Signup and view all the answers

What is the primary requirement outlined by UNDRIP regarding Indigenous lands?

Free and informed consent must be obtained before project approvals affecting lands. Signup and view all the answers

What is the implication of the Coase Theorem?

Efficient outcomes can be achieved through negotiation regardless of property rights allocation. Signup and view all the answers

What does DRIPA require the Province of British Columbia to do?

Develop an action plan in consultation with Indigenous nations. Signup and view all the answers

Which landmark decision established that Aboriginal Rights existed?

The Calder decision in 1973. Signup and view all the answers

What does DRIPA stand for in relation to the court's decision?

Declaration on the Rights of Indigenous Peoples Act Signup and view all the answers

What does 'free, prior, informed consent' (FPIC) imply for provinces?

Provinces require consent before actions that may affect Indigenous communities. Signup and view all the answers

What was the specific time frame granted to the Province for consulting Indigenous Peoples after the court's decision?

18 months Signup and view all the answers

What significant action began with the issuance of Tree Farm License 39 in 1961?

A forestry firm received permission to harvest trees on Haida Gawii. Signup and view all the answers

What is a key distinction between Act Utilitarianism and Rule Utilitarianism?

Act Utilitarianism assesses each individual action, while Rule Utilitarianism focuses on preset rules. Signup and view all the answers

Which formulation of Kant's Categorical Imperative emphasizes treating individuals as ends in themselves?

2nd formulation: Treating people as ends Signup and view all the answers

In John Rawls' Original Position, what unique condition do individuals face?

They do not know their own social position. Signup and view all the answers

Milton Friedman's perspective on the social responsibility of business primarily advocates for what?

Maximizing profits while following ethical rules. Signup and view all the answers

What is a fundamental principle of teleological ethics?

Consequence of actions is what determines moral value. Signup and view all the answers

The Difference Principle in Rawls' Theory of Justice aims to maximize what?

The conditions of the least advantaged people. Signup and view all the answers

Which of the following is a potential weakness of utilitarian ethics?

It can lead to unjust actions if the ends are justified. Signup and view all the answers

Kant's first formulation of the Categorical Imperative requires an action to be what?

Justifiable through universal principles. Signup and view all the answers

What does the concept of 'Veil of Ignorance' relate to in Rawls’ theory?

Ensuring unbiased decision-making in justice. Signup and view all the answers

Which is NOT a principle from Kant's ethical theory?

Maximizing aggregate happiness Signup and view all the answers

Study Notes

Class 1: Intro + Key Economic Concepts

Opportunity cost is the value of the best alternative forgone.
Marginal costs are excluded for sunk costs, which have no observed outlay (e.g., free parking).
The marginal principle states that any policy should be pursued as long as its marginal benefit is greater than its marginal cost.
Policies may have unintended consequences because they alter individuals' incentives.
Policies should expand beneficial policies up to the point where marginal benefits equal marginal costs.

Key Learning Points of Class 1

Use opportunity costs, not accounting costs, when evaluating policies.
Expand beneficial policies up to the point where marginal benefits equal marginal costs (requires estimates of MC and MB).
Well-intended policies can have undesired impacts, often because of failures to consider incentive effects.
Many well-intended policies work well because unforeseen consequences are often negligible or minor.

Class 2: Market Efficiency

Prices are determined by supply and demand in market economies.
Demand represents consumers' aggregate preferences.

Class 3: Market Failure

Monopoly: Market with a single seller.
Cartels: Multiple sellers colluding on prices.
Oligopoly: Small number of sellers competing, aware of market influence.
Monopolistic competition: Large number of sellers with differentiated products.
Monopsony: Market with a single buyer.
Asymmetric information: Seller knows product details buyer doesn't.
Search goods: Quality determined at purchase.
Experience goods: Quality learned after consumption.
Credence goods: Quality uncertain even after consumption.
Public Goods: Non-rivalrous and non-excludable (parks, lighthouses).

Class 4: Fairness

Distributive fairness: Final allocation of benefits—just and morally acceptable.
Procedural fairness: Fair “rules of the game” (e.g. equitable procedures).
Fairness vs Efficiency Trade-offs: Achieving distributive fairness may reduce efficiency.

Class 5 & 6: Ethics

Ethics is the study of moral judgments.
Utilitarianism: Aggregation of cost/benefits (total benefit > total cost, not necessarily majority benefit).
Act Utilitarianism: Assesses each individual action's utility.
Rule Utilitarianism: Individuals adhere to rules, presuming they are followed.
Kant's moral rules: Non-consequentialist, based on rules, not outcomes.
Categorical Imperative: Act according to universalizable rules.

Friedman's argument: Business's sole social responsibility is profit maximization.
Four responses to market failures (particularly role of ethics).

Class 8: Politics

Government decision-making is driven by voter preferences and interest group activity.
Properties of voting and electoral systems.
Interest group activity.
Direct self-interest of bureaucrats/politicians.

Class 9: Indigenous Business Issues

Indigenous land title and treaty history in BC.
Royal Proclamation of 1763.
Constitution Act 1982.
Honour of the Crown.
Duty to consult and accommodate.
UNDRIP.

Class 10: Environmental Policy #1

Negative externalities: too much of an activity (too much pollution).
Efficiencies are reduced due to incomplete property rights.
Policy options.
Negative externalities result in too much of an activity; it's economically inefficient.
Analysis of externalities involves incomplete property rights.

Class 11: Environmental Policy #2

Policy solutions: Voluntary, Command-and-Control, Market-based
Voluntary: Ecolabels, Third-party Audits.
Command-and-Control: Quantity controls, standards.
Market-based: Taxes, tradable permits.

Class 12: Natural Resources Management

Renewable resource depletion.
Stock of population over time.
Logistic growth.
Growth describes how population stock grows.
Logistic growth demonstrates relationship between stock, intrinsic, and carrying capacities.
Harvest rate and its relationship with growth rate.
Open access problem.

Class 13: International Trade Policy

Comparative advantage.
Effect of trade policies.
Tariffs and quotas.
Evaluating trade policies.
Trade policies under competitive market

Class 14: Competition Policy

Protecting competitive markets.
Preventing firms with dominance leveraging power.
Preventing misleading advertising and deceptive marketing.

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Description

This quiz covers fundamental economic concepts such as opportunity cost, marginal principles, and the implications of policy evaluation. It emphasizes the importance of understanding marginal benefits and costs, as well as the potential unintended consequences of policies. Test your knowledge on how these concepts apply to real-world scenarios.

Key Economic Concepts - Class 1

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