COMM 171 - Lecture 8 Flashcards
How much of a public good shuld be provided
when MSB = MC
MArginal scoial beenift = maringal cost
Welfare state:
The welfare state is the
collection of government
programs designed to alleviate
economic hardship
What’s the rationale for the welfare state
Alleviating income inequality
2. Alleviating economic insecurity
3. Reducing poverty and providing access to health care
Goverment transfer, poverty program and social insureance
A government transfer is a government payment to an
individual or a family.
* A poverty program is a government program designed to
aid the poor.
* A social insurance program is a government program
designed to provide protection against unpredictable
financial distress.
what is the poverty threshold
The poverty threshold is the annual income below which
a family is officially considered poor
The poverty rate is the
percentage of the
population with income
below the poverty
threshold.
* A Supplemental
Poverty Measure
includes income from
government aid, a
measure that experts
consider to be more
accurate
Gini coefficient
Gini coefficient: a number that summarizes a country’s level
of income inequality based on how unequally income is
distributed across quintiles
Trade protection and tarriff definiton
olicies that limit imports are known as trade
protection or simply as protection.
* A tariff is a tax levied on imports
A tariff has two effects
A tariff has two effects:
1. Increase in domestic production, reduction in
domestic consumption.
– The good is now produced by the higher-cost country.
2. Less is consumed, leading to lower gains from trade
Import quota and its effects
Import quota is the legal limit on the quantity of a good
that can be imported.
* Effect? Same as a tariff, except instead of
government revenue, “quota rents” will go to quota
license holders.
