Question

Which of the following is an accurate statement?

	a.	prosperity depends on the proper functioning of property rights
	b.	free trade depends on the proper functioning of property rights
	c.	prosperity without a high degree of free trade is impossible
	d.	prosperity depends on the rule of law
	e.	all of the above

To assume that all regulators try their best to serve the public interest even when it conflicts with their own private interest is consistent with with which of the following approaches to regulation theory?

	a.	the public choice approach
	b.	the public welfare approach
	c.	both of the above
	d.	none of the above

Halving the level of the minimum wage will have which of the following effects? (You may assume the minumum wage is above the market wage).

	a.	it will increase the level of employment
	b.	it will increase the degree of poverty in the economy
	c.	both of the above
	d.	none of the above

Answer 1

Answer (1st Part) - The correct option is D ie., Prosperity depends on the rule of law. Prosperity means to flourish in one’s life m, earn good amount of money and do well in life. It mainly depends on the rule of law in a nation or a place. Since rule of law helps to predict the circumstances and helps people to find the investment that best suit their interest. A good rule of law helps people to make forecasts about their future and thus, they are able to do well and be prosperous in the coming future.

Answer ( 2nd Part) - The correct answer is Public choice approach. According to this approach it is considered that opnions will be taken in the best interest of the public and since it is considered that the administration is rational in decision making as well as neutral thus only public opnion matters the most. Generally it is seen that the government people often use public resources for their own benefit and hence considering their opnion will not be a good decision.

Answer ( 3rd Part) - The correct option is A ie., It will increase the level of employment. Minimum wages are the limits imposed by the government which the employers will pay to their workers. If minimum wages are lowered then it will leads to more employment as more cheap labor will be available. Since cheap labor is available there would be more demand of labor and hence it would increase the employment.