Reasons for Government Intervention Flashcards
1
Q
Why do Government’s Intervene?
A
Because of Market Failure
2
Q
What is Market Failure?
A
Inefficient allocation of scarce resources
3
Q
What are the forms of Market Failure?
A
- Lack of Public Goods
- Underconsumption of Merit Goods
- Overconsumption of Demerit Goods
- Information Failure
Things in chapter 6 basically
4
Q
Why are demerit goods overconsumed?
A
- Information Failure
5
Q
Why are merit goods overconsumed?
A
- Information Failure
- Underprovision due to high cost
