Theme 1.4 - Government Intervention Flashcards
1
Q
Why does govt intervention occur within an economy?
A
Prevent market failure
Mitigate welfare loss/gain
2
Q
What is govt failure?
A
Govt intervention that results in net welfare loss
2
Q
What are the primary forms of govt. intervention?
A
Tax
Subsidy
Information provision
Min/Max price
Pollution permits
Regulation/Legislation
Public Goods
3
Q
What are the main causes of govt failure?
A
Distortion of price signals
Unintended consequences
Information gaps
Excessive administrative costs
