What are the economic costs of the externalities caused by air toxins (Front Page Economics "Air Pollution Kills"), beach closings, or thermal pollution (Front Page Economics "Cut the Power to Save the Fish?")? How would you measure their value? 2. Does anyone have an incentive to maintain auto exhaust control devices in good working order? How can we ensure that they will be maintained? Are there any costs associated with this policy? 3. Why are incomes distributed so unevenly? Identify and explain three major causes of inequality. 4. How might a flat tax affect efficiency? Fairness? 5. How would the distribution of income change if Social Security were privatized? 6. Why don't we give poor people more cash welfare instead of in-kind transfers like food stamps, housing assistance, and Medicaid? 7. Suppose we refused to sell goods to any country that reduced or halted its exports to us. Who would benefit and who would lose from such retaliation? 8. Domestic producers often base their demands for import protection on the fact that workers in country X are paid substandard wages. Is this a valid argument for protection?

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