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Economics > Government Intervention > Flashcards

Government Intervention Flashcards

1
Q

What are the 5 main reasons for government intervention in markets?

A
  1. Support firms
  2. Correct market failure
  3. Promote equity
  4. Collect government revenue
  5. Support poorer households
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2
Q

What is the UK’s market regulator called?

A

The Competition & Markets Authority

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3
Q

What is the maximum market share a firm is allowed to reach through mergers?

A

25%

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4
Q

What are the 4 main types of regulation?

A
  1. Price regulation
  2. Profit regulation
  3. Quality standards
  4. Performance targets
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5
Q

How can regulators promote small businesses?

A
  1. Subsidies
  2. Tax incentives
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6
Q

What is competitive tendering?

A

Outsourcing the supply of products to private firms

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7
Q

What are the 4 main methods the government uses to promote competition and contestability?

A
  1. Promotion of small businesses
  2. Deregulation
  3. Competitive tendering
  4. Privatisation
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8
Q

How can governments protect suppliers? (3 ways)

A
  1. Nationalisation
  2. Limiting monopsony power
  3. Subsidies
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9
Q

How can governments limit monopsony power? (5 ways)

A
  1. Anti monopsony laws
  2. Encouraging self regulation
  3. Appointing a regulator
  4. Subsidies for suppliers
  5. Minimum prices
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10
Q

How can governments protect employees?

A
  1. National minimum wage
  2. Health and safety laws
  3. Trade unions
  4. Workers’ benefits laws (paid holiday, maternity leave. working conditions)
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11
Q

What is the aim of government intervention regarding prices?

A

Affordable and stable prices

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12
Q

What is the aim of government intervention regarding profits?

A

Limiting profits to protect household income but ensuring there is enough profit to incentivise enterprise

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13
Q

What is the aim of government intervention regarding efficiency?

A

Reducing wastage

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14
Q

What is the aim of government intervention regarding quality?

A

Ensuring products are fit for purpose and contribute towards improving living standards?

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15
Q

What is the aim of government intervention regarding choice?

A

Increase choice

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16
Q

What are the 2 main limits to government intervention?

A
  1. Regulatory capture
  2. Asymmetric information
17
Q

What is regulatory capture?

A

When firms influence regulators to align more with the interests of the firm

18
Q

What is asymmetric information?

A

Where the government or regulators make poor decisions due to not having the full and relevant information

19
Q

What is asymmetric information?

A

Where the government or regulators make poor decisions due to not having the full and relevant information

Economics (12 decks)

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