Unit 21 Flashcards
1
Q
Define government failure.
A
Government failure occurs when government intervention leads to a net welfare loss compared to the free market solution.
2
Q
What is public choice theory?
A
Public choice theory is about how and why public spending and taxation decisions are made.
3
Q
Define rent-seeking.
A
Rent-seeking involves the use of political power by an economic agent manipulate the distribution of resources for their own benefit at the expense of others without creating any extra wealth for society.
