Author Question: How can market failure occur in the market for hybrid automobiles? What could the government try to ... (Read 69 times)

hbsimmons88 · **on:** Jun 30, 2018

How can market failure occur in the market for hybrid automobiles? What could the government try to do to improve the situation?

Question 2

The GI Bill provided educational opportunities to many young men returning from military service. Using a production possibilities curve, demonstrate how the GI Bill affected economic growth and explain your answer.

kjohnson · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

An unregulated market could produce too few hybrid autos since these cars produce benefits for someone other than the buyers and sellers. As such, the government could provide a subsidy or tax credit to those consumers who purchase hybrid or other fuel efficient autos in an effort to promote more purchases and usage of fuel efficient vehicles.

Answer to Question 2

Implementation of the GI Bill shifted the U.S. economy's production possibilities curve in an outward direction. The availability of educational subsidies helped former soldiers attain higher levels of education, thereby adding to the nation's stock of human capital and improving the productivity of labor.