Government Failure Flashcards
0
Q
When does the government intervene?
A
- To provide public goods
- to correct shortages and surpluses
- to correct negative externalities
- to provide merit good
- to remedy in equality income
- to promote competition
1
Q
Government failure
A
This refers to the situation where the government intervenes to correct the market failure but ends up making the situation worse. I.e. There’s a net loss of economic welfare.
2
Q
How does the government intervene?
A
- subsidies
- taxes
- gov. spending
- min and max price
- regulation
3
Q
Sources of government failure
A
Market distortions Welfare impact Short termism Electoral pressure Impact on the environment
