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Economics - Ethan Parmar > T8 - gov intervention > Flashcards

T8 - gov intervention Flashcards

1
Q

What is it

A

Regualtory action taken by the gov to seek changes of desciosn made by poeple and firms about social and eco matters

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2
Q

Reasons for gov in

A

Correct MF
Improve distrubution of incoem and wealth
Imrove eco performance

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3
Q

What will gov intervene on

A

Public goods
Prinicpal agent problem
Info failiure
Inequality
Monopoly power
Macro instability
Moral hazard
Factor immobility
Externalitles
Demerit and merit goods

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4
Q

What is pricniple agent problem

A

where the pricnipal has oen objective andthe agent has another, plsu info assytmetery causing a cofnlcit of inetrest

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5
Q

Pro free market view of gov intervension

A

Price fucntion allocates best
Competition is key
Only some int on shit liek pub goods

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6
Q

Inetrvnsionist view on gov reg

A

Gov is needed to reduce marker failiure, no other option

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7
Q

Gov intervention methods

A

Subsidse
Tax
Regulation
Information
Permits
Price regualtion
State Provision

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8
Q

What is a max/min price

A

Where firms cant go above/below these prices

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9
Q

When will gov impose max price

A

When not happy with equilibrium

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10
Q

What does max prices and min prices do

A

Creates excess demand and supply
Black markets

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11
Q

adv on max price

A

consumer welfare
monopoly power
competition
merit goods

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12
Q

dis adv of max price

A

Excess demand
lack of supply
black markets

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13
Q

adv of min price

A

incentives to producer
fuck demrit goods

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14
Q

dis advof min price

A

too high prices
regressive and inequality
black markets
inneficincy adn complacency

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15
Q

eval of max and min prices

A

elasticities?
inc inequaltiy?
set at teh right level
black marktes

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16
Q

when will a min price have little impact

A

when below free market equilibrium

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17
Q

What are subsidise

A

Payment to consumers or firmss

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18
Q

Purpose of subsidise

A

To reduce to cost of prodyctuon or consumption (shift supply curb to the right)

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19
Q

When are subsidise used

A

For merit goods or psotive extenality

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20
Q

What is a direct subsidy

A

Straight to the consumer boosting demand

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21
Q

What si a guarnetteed payemnt

A

min price

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22
Q

What is an input subsidy

A

for costs of prodcution

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23
Q

How is total spendign on a subsidy calculated

A

Susbsidy price per (ON SUPPLY LIEN AT NEW MARKET EQUILBRIUM) unit multiplied by leevl of output

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24
Q

When there is inelastic demadn what happens to the subsidy

A

It has a larger effect on equilibrium price

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25
Q

Impact fo subsidy for producer

A

Inc revenue

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26
Q

Impact fo subsidy for consumer

A

Lower prices, higher qtty

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27
Q

Pros of subsidy

A

Helps firms
Increased demand
Macro conflict
Merit goods

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28
Q

Arguments against subsidise

A

Is it fair, who is aided
Costly to governemnt
distort market mechansim
Encourages innefficny

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29
Q

Evalautions of subsidy argyments

A

Productivity and efficny?
Who pays for the cost of it
Will firms pass onto onsumer
Gov failiure

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30
Q

What is taxation

A

Fee charged by the gov onicnoem or activity

31
Q

Purpose fo tax on negatiev xxternaltiies

A

make consumers/producers pay the full social cost

32
Q

Adv of tax on MF

A

Source of tax revenue
Changes prices to true prices

33
Q

Dis adv fo tax on MF

A

Unfair
Regressive adn inquality
black markets
laffer affect
macro clash

34
Q

what can be said to be a good positive thing for taxes

A

gov can get inc tax revenue to correct more MF

35
Q

eval fo tax

A

elastsicity of demand?
regressive?
what is the level set at determined by?
will it causes inneffciny?

36
Q

how can any increase in price be regressive

A

those on lower incoems will pay mroe, those on higher nto affected as much

37
Q

What is a tradeable permits

A

A permit that allows owners to produce a certain amount fo say pollution , which then if unsued can be traded to anothe rpolluter

38
Q

adv of permits

A

incetive to ecplore other methods
fair for firms
lowers market failirue
can be sold ebtween firms

39
Q

cons of permits

A

high admin costs
rich can just buy
black markets

40
Q

eval of permit

A

who gets how much?
can firms afford fines of not following?
affect comp?
will firms just lie?

41
Q

What is state provision

A

Gov finances the prodcution of a raneg of goods through taxation then provides them for nearly free to consuemrs or for free

42
Q

adv of state proviso

A

equitable
social optimum level
reduce ineuality

43
Q

cons of state aid provision

A

costly to gov

44
Q

what are the two methdos not incldued in teh STRIPPS acronym

A

privatisation and nationalisation

45
Q

Reasons for why gov Should interve

A

Equality
Provision of public goods
Education
Shift consumer behaviour
Portects enviroment
Reduce monopoly power
Strategic planning of infrastrtcure

46
Q

Dis adv of gov intervntion

A

Gov failiure
Lack on incetives
Less choice
Impac perspnal frreedom

47
Q

Adv of free market economy

A

Efficent allocation of scarce resoruces
Comeptitiev prices
Inovation and inevtnion
Profit motive
Comepetiton

48
Q

how may govs inetevene to correct factor mobility mf

A

education and training

49
Q

how may gov intevene to correct mf of public goods

A

state provision

50
Q

how may gov intevrent to deal with oc of demerit

A

rasising prices
makign consuemr more aware

51
Q

how may gov ineteven to deal with uc of emrit goods

A

reducing prices
makign consumer more aware

52
Q

how to know whcih gov int method to talk about

A

go through STRIPPS and say whetehr implementign or removign the method woudl affect shit

eg woudl rising taxes on demrit goods do shit

53
Q

how may the gov itnervent of inperfect ifno

A

info

regulation

54
Q

how may the gov itnervene on relative povery and ineuqality

A

reducing prices
regualtion on labour markets

55
Q

how may the gov deal with monopoly power causign mf

A

comp policy
regualtion
price regualtion
subsidse to new firms

56
Q

how to deal with inforamtion failirue

A

inc suppl of information
inc education
regualtion on advertising
indsutey standards

57
Q

how to icnrease demadn for ifnoramtion

A

lower cost of it
maek it publci good
simplify it

58
Q

evalatuion fo governemtn regualtion

A

comp and efficncy effect
enforced proeplry and regualtoruy capture
what about other methods

59
Q

when are there no chocies but to regualte

A

with firms such as natrual monopolies
gov firms

60
Q

woth regards to the firm adn type of market what si teh eval for regualtion

A

what type fo firm is ti, what good are they providing, hwo comeptitiev si the market,

61
Q

with regards to vested ifnleucne what is the evalatuion for regualtion

A

will it be biased and swayed by publci pressure groups, poltiicans and cosnumers

62
Q

example of when taxes woudl be sued

A

when the prices of shit is too low really
on sn profits

63
Q

when woudl susbdise be used

A

when mf causes to high prices and underproduction

64
Q

when would regaltion be used

A

too high prices
lack fo competition
info failiure
labour markets

65
Q

when woudl degregulation be used

A

protmote comeption

66
Q

when woudl ifnormation be used

A

for mf where there is a lack of shit
comeptition
dealign with assytmetries
factor immoviloty

67
Q

when woudl max prices be used

A

equilibrium price is too high for social optimum level

68
Q

when would min prices be used

A

when there is too low of an equilibrium price for social optimium level

69
Q

when would permits be used

A

when shti liek regaultion,t axes and other methods are just shite

70
Q

when would state prvosion be used

A

for shit that there is a lack of in a free market

71
Q

when would nationalisation be used

A

monopoly power
to high costs in private sector

72
Q

when woudl privatisation be sued

A

lack of effcinecy
costly on budget

73
Q

what can icn reguaktion and anythign that causes firsm to experience lower demand or higher price cause

A

greater innovation from firms

Economics - Ethan Parmar (73 decks)

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