Explain the economic rationale behind military alliances. Do new members always strengthen the alliance? Why or why not?
What will be an ideal response?
The economic rationale behind military alliances is that if defense is a public good, then it is possible that the optimal sharing group for national defense is larger than one country. Thus it provides an economic rationale for military alliances such as NATO. New members do not always strengthen the alliance. Since alliance members pledge to protect one another, the addition of weak members that are vulnerable to conflict can actually weaken the alliance by making the alliance less advantageous for many of its strongest members.
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The study of economic mobility discussed in the text pinpoints five factors that are correlated with economic mobility. What are those five factors and how do they affect economic mobility?
What will be an ideal response?
Which of the following would not result from a price ceiling (set below the equilibrium price)?
A) a shortage B) fewer exchanges C) an increase in supply D) nonprice rationing devices