21-c Should the Government Provide the Necessities of Life for Free?

Some people argue for their necessities of life like water and food because we
all know that we cant live without them and it is wrong to charge for them and the
government should provide them free for us, for everyone. Another, they argue the
medical care because it is also a necessities of who are sick. And without it, people
will die or experience an extremely low quality of life. Making people pay for
medical care is wrong. The government should provide it free for those who need it.
And if the government gave the necessities of life for free, at zero price,
people would want to consume these goods up to the point of zero marginal utility
for each good. They would do so because the marginal utility of the good is greater
than its price. And people can derive more utility from purchasing the good than
they would lose in parting with the dollar price of the good. Example, if the price is
of a good is $5, an individual will continue consuming the good as long as the
marginal utility derives from it is greater than $5.
And resources are must be used to produce every unit of good consumed, the
government uses scarce resources to provide goods with low marginal utility. And if
that happens, then fewer resources are available to produce other goods.
And answer again the question, should the government provides the
necessities of life for free? I think it depends on the situation, if people cant pay at
the higher price at least give them consideration like giving them a low price. And
this argument needs a lot of time to find the perfect and right answer.

21-3 Behavioral Economics

Economists are interested in how people behave with respect to marginal
utility. They predicts that when the MUlP ration of one good is greater than it is for
another, then individuals will buy more of the good with the higher MUlP ratio and
less of the good with lower MUlP ratio. Behavioral economists argue that some
human behavior does not fit neatly because they are self-interested, consistent. And
they describe some of the findings of behavioral economists.

21-3a Are People Willing to Reduce Others Income?

Two economists, Daniel Zizzo and Andrew Oswald, set up a series of
experiments with 4 groups, each with 4 people. To illustrate, in the group consisting
of Smith, Matsui, Brown, and Riverra, and each person was given same amount of
money and asked to gamble with it. At end of the act of gambling, 2 out of 4
persons in each group had won money and 2 had lost some. Like Smith and Riverra
had more money after gambling, and Matsui and Brown had less. And all four were

given an opportunity to reduce the amount of money held by the others in the
group. For example, Brown could pay to reduce Smiths money, and Matsui could
pay to reduce Riverras and so on.
They expect that might be that no one will spend money to hurt someone
else if it means leaving himself poorer. But Zizzo and Oswald found that it was only
62 percent of the participants did just like that. The problem is the people behavior
because theyre concerned of their relative rank and status than with the absolute
well-being. And some economists argue that such behavior is irrational and
inconsistent with utility maximization. The problem is, if people get utility from
relative rank, the effect is they are buying a move up the relative rank ladder by
reducing the size of the gap between themselves and others.