1. WRITE!
“People should be allowed to sell their kidneys on the open market”- Agree or disagree with this statement, giving economic and ethical reasons for your opinion. Discuss the problems with the current market for kidneys, and problems that may occur as a result of your decision.

2. What is an incentive? (answer in space at bottom of sheet)
Pick up sheet.
What is an incentive?
(answer in space at bottom of sheet)

3. Incentive A thing that motivates or encourages one to do something
Think of an example of a positive incentive (encourages a behavior)
Think of an example of a negative incentive (discourages a behavior)

4. Why does the cashier let Biff eat all of the mints?
Fun with a stop watch

5. Perverse incentives
A college football coach can earn an extra $75,000 if at least 75% of his players graduate and a bonus of $225,000 if his team goes to a bowl game. Which one do you think he will focus on?

6. “Three strikes” laws mandating that 3 time felons get a LONG prison sentence, may encourage criminals to kill witnesses on their 3rd offense to avoid getting caught.
What other perverse incentives are there?

7. Working around the incentive
A parent is having problem potty training their child. The parent knows that the child likes M & Ms. They tell the child, “every time you use the potty (instead of peeing your pants), I will give you some M & Ms.
What is the result?

8. A first grade teacher has a problem with her students continually asking for pencils. She tells them that if they keep their pencil until it is sharpened all the way down, before they ask for a new one, she will give them 50 cents.
What is the result?
Cash For Grades

9. (Write in the TOP SPACE below the title)
Read the article ‘Why not split the check’. How does this relate to public goods/services and taxation?
(Write in the TOP SPACE below the title)

10. Should we split the check?
Group of 5 friends
Drinks cost $2 each
Friend 1 consumes 6 drinks-
Friend 2 consumes 8 drinks-
Friend 3 consumes 2 drinks-
Friend 4 consumes 5 drinks-
Friend 5 consumes 4 drinks-
Total Bill for everyone is $50
Who would agree to split the check and why?
(Write on back of your paper)

11. How much do you eat at McDonalds compared to Cici’s Pizza? Why?

12. Taxes and use of services
Public service=Healthcare for ALL Citizen A- Poor, unhealthy, frequently sick- contributes $20/month in taxes to healthcare system. Citizen B- Rich, healthy, rarely sick- contributes $200/month in taxes to healthcare system. Which citizen is content to pay taxes?

13. Public Goods & Services
Government will also intervene to provide public goods & services…
Goods & services that benefit the general public
Are too expensive for individuals to pay for - Most likely would not be provided if individuals had to pay themselves

14. Free Riders

15. Writing
In a free market economy, what role should the government play? (what do we need the government to do? What should they pay for?)