1.4 Government Intervention Flashcards
(7 cards)
What is a Maximum Price?
A legally-imposed maximum price in a market that suppliers cannot exceed.
What is a Minimum Price?
Minimum prices or price floors are the minimum legally allowed prices for a good set by the government.
What is a Pollution Permit?
A Pollution Permit allows the owner to pollute up to a specific amount of pollution and the government controls how many permits there are so limits the maximum amount of pollution.
Why does the government provide public goods?
Public Goods are non-excludable and non-rivalry and so the free rider problem says they will be under-provided by the free market.
Why does the government provide information?
To allow people to make informed decisions. They may also force companies to provide information.
What is Government Failure?
When government intervention leads to a new/deeper market failure.
What are Unintended Consequences?
When a government intervention causes effects which the government did not intend to happen.
