Goverment Failure

Question 1

4 ways the market fails

Answer 1

positive / negative externalities
information gaps
public goods

Question 2

ways the government can intervene

Answer 2

taxes
subsides
tradable pollution permits
min and max prices
regulation and information
cash incentives

Question 3

gov failure definition

Answer 3

when the gov tries to intervene market failure , but makes the allocation of resources worse.

Question 4

3 main causes of guv failure

Answer 4

distortion of price mechanism
administration costs
information gaps

Question 5

maximum price : gov failure
apply to housing

Answer 5

lower prices reduce incentive to supply creating excess demand
by lowering house prices , housing quality worsened and became more scarce due to the lack of incentive

Question 6

example of law unintended consequences

Answer 6

speed bumps causing ambulances for being late
for every 1 person saves by speed bumps
estimated to cause 85 deaths

Question 7

what’s administration costs

Answer 7

the cost monitoring and regulating government laws aswell as the cost of admin work

Question 8

examples of administration costs

Answer 8

• fishing limits need regulators
• pollution merit usage need monitors
• nhs spends 21 billion on admin
• banning drugs needs more police
• taxes on cigarettes need tax collectors regulation