Th1.4: Government Failure Flashcards
1
Q
Define government failure
A
when government intervention leads to a net welfare loss in society and a misallocation of resources
2
Q
What is the relationship between social costs and social benefits?
A
when total social costs arising from the intervention are greater than the social benefit
3
Q
What are the four causes of government failure?
A
distortion of price signals
unintended consequences
excessive administration costs
information gaps
