Gov't and economy and CBA

Question 1

When should Govt’s intervene

Answer 1

1. when markets fail to max efficiency. 2. when society values redistribution over efficiency

Question 2

What are gov’ts options to intervene

Answer 2

1. Price 2. Quantitiy 3. direct provision 4. private provision

Question 3

Effects of gov’t intervention

Answer 3

1. Direct: predicted by people not to change behavior. 2. Indirect: result of change in behavior

Question 4

Why intervene

Answer 4

1. Political economy 2. government failure

Question 5

CBA

Answer 5

why, what, how/how, how much, net benefits, execute

Question 6

A-94

Answer 6

provides guidance for how to do CBA’s

Question 7

equity-efficiency trade off

Answer 7

choosing between the size of the pie and how it is distributed