Role of government Flashcards
1
Q
what are the reasons for government intervention?
A
- Earn government revenue
- Support firms
- Support households on low incomes
- Influence the level of production
- Influence the level of consumption
- Correct market failures
- Promote equity
2
Q
What are the main forms of government intervention?
A
- price controls
- Indirect taxes and subsidies
- Direct provision of services
- Command and control regulation and legislation
- Consumer nudges
3
Q
What is direct provision of services?
A
when the government provides the services themselves ratehr than relying on the private sector.
4
Q
What are the two types of price controls?
A
price ceiling and floor
5
Q
what is a price ceiling?
A
maximum price set above the equilibrium price
6
Q
what is a price floor?
A
minimum prices set above the equilibrium price
