Define: rent seeking. Explain, verbally and graphically, the economic case against minimum wages. Who benefits from minimum wage laws? How does rent seeking fit into this analysis?

Explain some of the full costs associated with wealth transfers suggested by public choice analysis.

Define: utility, marginal utility, marginal benefit, diminishing marginal utility.

Why consumers treat political and market goods differently.

Explain the relationship between total utility and marginal utility. What is the principle of diminishing marginal utility? Is it possible to have increasing marginal utility?

What is the slope of the total utility curve (upward or downward) in the range of negative marginal utility?

Which of the following most directly reflects the law of diminishing marginal utility?
a. After watching two football games, Terry decides to watch a third game.
b. A sports fan enjoys watching Monday night football rather than going to the theater.
c. After listening to three compact discs, Kim decides to go bowling rather than listen to a fourth disc.
d. A musician receives the biggest ovation of the evening after playing the final number of a recital.

In the year 2020, newspapers will be smaller and mostly zero-priced, or so predict some futurists queried by the World Association of Newspapers.

Explain how voters can be considered consumers and how governments can be considered producers. What limits are there to this analogy?

Define rational ignorance. What are some reasons why we'd expect consumers to make better decisions than voters? Why is voting not rational? Why is voting rational?

Explain how voting for a politician is like buying a bundled good. How does this help politicians deviate from their constituencies' interests? Look at the argument made here. Explain it in terms of point 3 from today's lecture.

George Bernard Shaw wrote that "A government that robs Peter to pay Paul can always depend on the support of Paul." Relate this statement to the special interest effect. How does this affect consumer surplus? How does this affect producer surplus?

"Since government-operated firms do not have to make a profit, they can usually produce at a lower cost and charge a lower price than privately owned enterprises." Evaluate this view.

Define: the special interest effect. Give examples. Why would producers seek political favors that have the effect of reducing producer surplus? Explain verbally and graphically.

An increase in market demand for a normal good other things being equal will lead to
a. A fall in consumer surplus and a rise in producer surplus
b. A fall in both consumer and producer surplus
c. A rise in consumer surplus and a fall in producer surplus
d. A rise in both consumer and producer surplus

Consumer surplus in a market will tend to be higher when demand is
a. income elastic
b. income inelastic
c. price inelastic
d. price elastic

Which of the following is a true statement about the effect of a government-imposed minimum price floor when the price set is above the normal free market price?
a. If the government imposes a price floor, total consumer surplus will decrease
b. If the government imposes a price floor, all firms in the market will gain
c. If the government imposes a price floor, there will be a shortage
d. If the government imposes a price floor, consumer surplus will increase

What is the definition of consumer surplus?
a. The difference between the consumer's willingness to pay and and the price actually paid for the product.
b. The total value placed on products by the market
c. The difference between the consumer's willingness to pay and the firm's cost of the product.
d. The total value placed on products by consumers

Most of the benefits to agricultural support schemes such as the European Common Agricultural Policy go to
a. Consumers
b. The Government
c. Producers
d. Everyone gains equally from price supports

Today's Dilbert illustrates the difference between pecuniary and non-pecuniary wealth: