1.4.2 Flashcards
1
Q
Net welfare loss
A
Governments fail when they intervene in markets
Could worsen market failure
2
Q
Distortion of price signals
A
Government subsidies could distort price signals by distorting the free market mechanism
3
Q
Unintended consequences
A
When the actions of producers and consumers is unexpected, unintended
4
Q
Excessive administrative costs
A
The social benefits of a policy might not be worth the financial cost of administering the policy
5
Q
Causes of gov failure
A
DUEI
Distrotion of prove signals
Unintended consequences
Excessive administrative costs
Information gaps
