Some resources: Here are links to some news coverage of the two infrastructure b

Some resources:
Here are links to some news coverage of the two infrastructure bills. Feel free to find others! Relating to the physical infrastructure bill: https://www.nytimes.com/2021/08/10/us/politics/infrastructure‐bill‐passes.html https://www.nytimes.com/interactive/2021/07/28/upshot/infrastructure‐breakdown.html https://www.wsj.com/articles/senate‐set‐to‐pass‐bipartisan‐infrastructure‐bill‐tuesday‐11628597274 https://www.wsj.com/articles/infrastructure‐bill‐2021‐what‐11627515002
Relating to the human infrastructure bill:
https://www.nytimes.com/2021/10/28/us/politics/spending‐plan‐bill‐biden.html https://www.washingtonpost.com/business/2021/10/28/biden‐spending‐plan‐what‐is‐in‐it/
TASK: Your task is to examine the strengths and weaknesses of free markets to make decisions about allocations of resources and outputs in your chosen issue. Another way of putting the assignment is for you to answer the following two economic questions: (1) In what ways do markets and market incentives allocate resources “well” from society’s point of view? (2) In what ways do markets and market incentives allocate resources “poorly?”
In class, we’ve seen that under certain conditions, perfect competition does an excellent job of allocating resources. One question you may want to ask is how much like perfect competition your market is. To the degree it is like perfect competition, you might conclude that the marketplace is doing a good job. The less your market resembles perfect competition, or the greater the externality or equity concerns are, you might conclude that markets would be doing a poorer job allocating resources.
The measure to use for how well resources are allocated is our Three Tests of Allocating Resources and Outputs (TTARO): (1) Does whatever is being produced go to the high‐value users? (2) Is whatever is being produced being made at the lowest possible cost? (3) Is too much or too little being produced? (For a quick review, you can look at Week 4’s Video Snack 4.2, our November 2 class, and accompanying slides where we discussed the three tests.) Issues of externalities, monopoly power, fairness and equity can be relevant here.
Organizational details:
As you write your essay, you should focus on the following four concepts and organize your paper by using four section headings. You want to be clear!
A. Briefly present the issue and industry you are analyzing and tell us what the legislation proposes to do.
B. Discuss the strengths of markets in allocating resources well, relating them to our Three Tests of Allocating Resources and Outputs. Don’t forget to address concepts like marginal costs and marginal utility here and in the following weaknesses section. Think about the accuracy of market signals.
C. Discuss the weaknesses of markets in allocating resources well, again relating it to the “Three Tests” and, again, addressing the accuracy of market signals.
D. Based on sections B and C above, tell us how well you think markets allocate resources here, and what role government might play or shouldn’t play. Please note: We will not grade on whether you have a lot or a little faith in markets or in government, but rather on the economic logic you use to support your arguments.
This is an opportunity to clearly link economic theory to the real world. Sections B. and C. will be weighted most heavily