How Governments Interven? Flashcards
Define Maximum Price.
Prices too higher, max price is set and lowers cost e.g. rent.
Define Minimum Price.
Prices too low, min price is set and raises costs e.g. alcohol.
Define Taxes.
Discourages over consumed products by higher prices e.g. cigarettes.
Define Subsidy.
Money into struggling industries to encourage output e.g. forestry.
Define regulation.
Government prevents certain aspects of over consumed products - plain packaging on cigarettes.
Define Buffer Stocks.
Supply held as a reserve to safeguard on a result against unforeseen shortages or demands.
What is a Merit Good?
Under provided goods in private sector so government step in e.g. schools.
What is a Demerit Good?
Over consumed and over supplied good e.g. cigarettes.
What is an excludable good?
Good that you can exclude others from benefiting from.
What is a Rival Good?
Good that when you purchase item it takes always somebody else’s ability to purchase good.
What is a Non-Rival Good?
Good that if you purchase doesn’t effect anybody else’s consumption.
What is a Non-Excludable Good?
Good that you are not able to stop others from benefiting from.
Define Public Good.
Good that is Non-Excludable and Non-Rival e.g. radio program.
Define Private Good.
Good that is excludable and rival e.g. an orange.
Why does the government intervene?
Externalities, scarcity, missing market, partial markets, misallocation of resources, shortages or surplus and market failure
