mixed economic system Flashcards
what are maximum prices?
maximum prices are a method of price control in which the price of goods and services are set below the equilibrium price in order to encourage spending
what are minimum prices?
minimum prices are a method of price control in which the prices of commodities are set below the equilibrium price to encourage supplying more and to protect the interest of firms and buisnesses
what are the government responses to address market failure?
indirect taxation, subsidies,rules and regulation, education, privatization and nationalization, direct provision
what is indirect taxation?
indirect taxation is a method of preventing market failure in which taxes on demerit goods are increased which will eventually lead to a fall in demand for these products
what are subsidies?
subsidies are the money paid to firms by the government with the aim of increasing the consumption of certain goods and services
what are rules and regulations?
rules and regulations are rules that the government implements in order to avoid market failure
what is education?
education is a method for the government to prevent market failure by warning consumers of the disadvantage of demerit goods in order to discourage the consumption of demerit goods
what is privatization?
it is the transfer of ownership of assets from the public sector to the private sector
what is nationalization?
it is the purchase of private sector assets by the government
what are direct provisions?
direct provisions are the public goods provided by the government free of charge
