195 Midterm Study Guide 2

Question 1

Negative Externalities

Answer 1

When an individual or firm engages in some activity that imposes a cost on society that does not have to be paid by the party generating the externality

Question 2

Externality (page 109)

Answer 2

Cost or benefits that are imposed on neighboring firms or residents(Noise, pollution, additional traffic congestion)

Question 3

Property Rights

Answer 3

• Legal right to exercise control over some resources
• Most basic level, a property right involves control over-literal property
• Bestow certain rights; right to use the property, use it collateral, right to sell, transfer use to other parties
• seldom absolute

Question 4

Transaction costs

Answer 4

cost of conducting transactions

Question 5

Prisoner’s dilemma (page 116)

Answer 5

depicts how to rational agents each trying to maximize his own utility but unable to make binding agreement with the other, behave in a way that makes both of them worse off

Question 6

Collective action problems

Answer 6

• Shirking
• Free Riders
• Tragedy of the Commons

Question 7

Shirking

Answer 7

Collective action problem when there are too many ‘rational’ individual shirkers that cause no one left to do the work that made everyone in the group better off

Question 8

Free Riders

Answer 8

Those who enjoy the benefits of group action without contributing to the effort (Or w/o resisting from some harmful activity

Question 9

Tragedy of the Commons

Answer 9

Grassy area (Common) used for grazing livestock. Everyone benefits from it, but if they let too many animals there then it is depleted. If depleted no one can use.

Question 10

Alleviating collective action problems. (Page 130)

Answer 10

• Regulation
• Use government to provide goods
• Privatize the resource
• Rely on a “Privileged group”
• Provide “Select Incentives”
• Develop Informal Solutions

Question 11

California’s Housing Crisis (Facts) [class slides 1/22/21]

Answer 11

• Housing need from 2015-2025 is 180,000 but in 2016 was only at 100,000
• Home ownership % gone down since 2006
• record high prices outside of the 07 bubble
• Esspecially impacts those from POC communities
• CA scores high with people in homelesness

Question 12

CA Housing Crisis (Barriers to solving)

Answer 12

• Single family zoning
• permit process is difficult/time consuming/expensive
• Multiple levels of government to get approved
• Local groth controls (limit numbers of homes, density of new housing, super majorities required)
• Land, labor, materials
• Concerns: Enviormental, gentrification, NIMBY,

Question 13

CA Housing Crisis (Collective action probm)

Answer 13

NIMBY?

Question 14

CA Housing Crisis (Cooperation Problem)

Answer 14

NIMBY?

Question 15

Indicators

Answer 15

Tools used to quantify and evaluate outcomes or performance

Question 16

Index

Answer 16

combination of indicators

Question 17

efficiency

Answer 17

degree to which resources are used to generate the most productive outcome

Question 18

Equity (Page 161)

Answer 18

Equal division of resources and responsibilities

Question 19

Horizontal Equity

Answer 19

measure of the degree to which similar persons and situations are treated equally

Question 20

Vertical Equity

Answer 20

degree to which the rich pay more than the poor (poor receive greater social benefits than the wealthy)
-Graduated Tax and social welfare policies

Question 21

Intergenerational Equity

Answer 21

fairness in the way that policies treaty different generations
-social security

Question 22

Efficiency equity trade-off

Answer 22

Efficiency is about using resources in a way that creates the largest possible cake, regardless of how the slides are cut and allocated. Equity is about dividing the pieces in a way that society deems fair.

Question 23

Three strikes law (facts) [1/29/21]

Answer 23

• Founded after murder of Kimber Reynolds & later Polly Klass case done by persons w/ previous convictions (put on ballot)
• AB 971 amended ballot to include non violent offenses as a strike
• Prop 184 passed
• increase prison sentence of repeat offenders (Minimum 25 years, could be min of 50 years if 2 third strike offenses)
• No time since prior considered, limited good time credit
• Argued as a deturent & a reducing criminals on street (opponents argued it went too far)

Question 24

Three Strikes Law (Outcomes)

Answer 24

• Leg analyist office in 2005 said it increased operating costs by 1/2 bil (tho less than estimate of 3 bil because some prosecutors dismissed prior strikes & variation in county enforcement)
• Estimated it cost 1.1 M for jailing costs, life sentences 1.8 million
• Overcrowding in prisons (tho not only factor)
• Increase rate in length of prison stay
• disparities in who was imprisoned by race/ethnicity
• decline in crime rate continued (though had already started & saw nation wide fall, so can’t established if they’re connected)