Question

please answer this question in 300 words

Analyze whether each of the following government activities is motivated by a concern
about equality or a concern about efficiency. In the case of efficiency, discuss the type of
market failure involved.
a. Regulating cable TV prices
b. Prohibiting smoking in public places
c. Breaking up Standard Oil Cartels in the world.
d. Imposing higher personal income tax rates on people with higher incomes
e. Instituting laws against driving while intoxicated

Answer 1

ANSWER-

a. Regulating cable TV prices- EFFICIENCY, cable companies often have market power due to firms controlling an unfair amount of the market causing market failure.

b. Prohibiting smoking in public places- EFFICIENCY, second-hand smoke causes a negative externality for non-smokers around the smokers.

c. Breaking up Standard Oil Cartels in the world- EFFICIENCY, one group or individual having disproportionately large control of the market causes market failure due to market power.

d. Imposing higher personal income tax rates on people with higher incomes- EQUITY

e. Instituting laws against driving while intoxicated- EFFICIENCY, Driving drunk causes an externality to bystanders who may be injured or killed.