1. Explain the main difference between the consumer demand approach and the capabilities approach to welfare measurement.

2. Suppose your research team is measuring income inequality in the US over the past decade and decides to use the difference between the median and mean of the income distribution as a measure of inequality. What does the mean income lying to the right of the median income imply? Explain one issue with the use of this measure. When comparing the median-mean difference measure, the Gini coefficient, and the Mean Log Deviation measure - which do you think is the best measure of income inequality? Why?

3. Describe a government program that is paternalistic (a real-world example is preferred, but you may invent a realistic one). What is paternalistic about it? What are the costs that will be incurred by the government while implementing this paternalistic program?

4. Discuss two shortcomings of using Gross Domestic Product as the primary measure of a country's economic performance.