Chapter 3 questions

1.                  What does Wheelan mean when he states that markets break down when there is a large gap between private costs and social costs?  Give two examples, one from the book and one from your own experience.

2.                  Do you agree with the author when he agues that allowing people to eat life-shortening ice cream is the same as driving a Hyundai crushing SUV?  What is he trying to illustrate with this analogy?

3.                  What does Wheelan mean when he argues that “government just doesn’t fix the rough edges of capitalism; it makes markets possible in the first place.”  What are some of the essential rules that make markets possible?

4.                  What is nature of public goods that make it unlikely that markets will provide them?

5.                  Why do governments redistribute wealth?  What did Amartya Sen have to contribute to the debate about wealth redistribution? Explain at least one current debate in congress addressing wealth redistribution.

6.                  How does Wheelan judge the oft-repeated phrase “taxpayers know better what to do with their money than the government does”?

7.        What is Wheelan’s thesis for chapter 3?a