List five theoretical economic reasons why federalism might be desirable
What will be an ideal response?
The first reason why federalism might be desirable is because of economies of scale in production it might make sense to have some larger levels of government to produce goods that exhibit economies of scale. The second reason is coordination of large programs, for example, the coordination of highways between cities. The third reason is that the most efficient size to produce a public good might vary. The fourth reason is externalities might have effects across governmental jurisdictions, thus implying a role for government in dealing with the externality problem. The fifth reason is that depending upon the public sector output, there might be many different sizes of the optimal sharing group.
You might also like to view...
Which of the following goods is an example of a good that is nonexcludable but not nonrivalrous?
a. National defense. b. A fishing lake. c. A lighthouse. d. A radio broadcast.
An increase in the discount rate ________ bank reserves and ________ the money supply if banks with outstanding loans are encouraged to pay them back more quickly
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
The fact that wants cannot be fully satisfied with available resources reflects the definition of
A) the what tradeoff. B) scarcity. C) the big tradeoff. D) for whom to produce.
In the monopoly, the firm's marginal revenue curve is ________, while in a perfectly competitive market, each firm's marginal revenue curve is ________
A) downward sloping; horizontal B) horizontal; downward sloping C) upward sloping; horizontal D) downward sloping; upward sloping