Government Intervention/Failure

Question 1

What are the different examples of govt intervention?

Answer 1

-Tradeable pollution permits
-Minimum and Maximum Prices
-Regulation
-Information provision
-Provision of public goods
-Indirect taxation
-Subsidies

Question 2

What are some types of governement failure and give the cause of each one

Answer 2

1.Distortion of the price mechanism leads to surplus or shortage
-Caused by minimum and maximum prices

2.Excessive administration costs
-Caused by making sure firms follow market regulations

3. Law of unintended consequences
   -Caused by society having the unintended response from any type of govt intervention