government intervention and failure Flashcards

1
Q

how can governments intervene

A

Subsidy
Tax
Regulations
Information
Pollution permits
State provision

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2
Q

what is government failure

A

when government intervention leads to a worsening of resource allocation (costs of a policy outweighs the benefits)

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3
Q

why does government failure happen

A

Inadequate information

Cost
(financial/opportunity)
Administrative errors
Unintended consequences
Self interest
Expertise (lack of)

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4
Q

how does a maximum price work
-draw

A

decreases price levels
-> excess demand

https://www.google.com/imgres?q=maximum%20price&imgurl=https%3A%2F%2Fwww.economicshelp.org%2Fwp-content%2Fuploads%2F2012%2F11%2Fmaximum-price-600x460.png&imgrefurl=https%3A%2F%2Fwww.economicshelp.org%2Fconcepts%2Fmaximum-prices%2F&docid=sf-3Xw6mIVAoVM&tbnid=FcgHw1ZaiLDN4M&vet=12ahUKEwiZlbjXr6WMAxWaTkEAHRUUEwYQM3oECBwQAA..i&w=600&h=460&hcb=2&ved=2ahUKEwiZlbjXr6WMAxWaTkEAHRUUEwYQM3oECBwQAA

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5
Q

how does a minimum price work

A

increases price levels
->excess supply
used on demerit goods

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