PADM 5006 Exam 1 Fall 2007
Use separate sheets of paper as needed to answer. Please be sure to put your name on your answer sheets, the part of the exam you are answering, and the number of the question you are answering. When done staple together all your answer sheets with this copy of the questions on front and hand them in.
Part I (60 points): Please briefly explain your responses.
1. Between September 2005 and May
2. Why should you care about the elasticity of demand and elasticity of supply for a good you are considering subsidizing? Include a demand and supply sketch in your explanation.
3. What are some of the major
criticisms of the definition of the poverty line used in the
5. It is getting difficult for the army to recruit more soldiers. One strategy would be to raise the pay and benefits to attract more recruits. This would imply more taxes. We could implement a draft and not raise the pay or benefits to avoid having to raise taxes quite so much. Suppose you are evaluating the costs of using a draft versus raising pay and benefits, in conducting your study how would you evaluate the costs of the new recruits? In your answer please comment on the difference between “on-budget costs” and social costs.
6. What’s the difference between a social insurance program and an income redistribution program? Please give an example of each and explain how the justifications differ.
Part II (40 points): Please explain your responses fully.
2. a) What is Social Security?
b) How does Social Security work?
c) Why are some problems with Social Security anticipated?
d) What are some alternatives for dealing with these problems?