CH11 Flashcards
(65 cards)
Why have development plans often failed?
All of the above (insufficient specificity, overlooking non-economic factors, overambition)
What are sectors where demand grows faster than supply during development called?
Bottlenecks
What price reflects true social opportunity cost?
Shadow price
Which is a cost/benefit not captured by market prices?
Air pollution caused by a factory
Why do market prices fail to reflect public goods’ value?
Public goods cannot be easily sold or bought in markets
Key difference between social and market evaluations?
Social evaluations consider externalities and distributional effects
Example of non-market value?
The value of a scenic view
Why is project appraisal important?
All of the above (worth pursuing, risk ID, environmental impact)
What does a cost-benefit analysis evaluate?
Whether the benefits outweigh the costs
Tool commonly used in project appraisals?
SWOT Analysis
What types of risks does project appraisal identify?
All of the above (financial, technical, social, environmental, economic)
Factors leading to poor plan performance?
All of the above
Institutional requirement for effective private markets?
Enforcement of contracts
Market-facilitating legal practice?
Clearly established property rights
Common reason for market failure?
Information asymmetry
Example of a public good?
National defense
Why do governments regulate markets?
To mitigate negative externalities
Main purpose of subsidies?
To encourage investment in socially desirable projects
Consequence of market power?
Exploitation of consumers
Plan covering all aspects of national economy is called:
Comprehensive plan
Rationale for development planning?
Market failure
Shadow price is:
The social value of a good or service
Input-output table represents:
Flows of goods and services between industries
Key use of input-output analysis?
Identifying key sectors for growth
