Government intervention Flashcards
(17 cards)
What is market failure?
Market failure is the failure to the market to allocate resources in the most efficient manner
What are demerit goods?
Demerit goods are goods that aren’t beneficial for you and are overconsumed usually due to misinformation
What are merit goods?
Merit goods are goods that are good for you and have a positive impact but often under provided. E.g. gym
What is an externality ?
An externality is when a decision effects a third party
What is non rivalry?
When your use dosent stop someone else from using it.
What are the types of government intervention?
S-Subsidies
T-Taxation
R-Regulation
I-Information
P-Pollution permits
S-State provisions
What is a completely free market
A completely free market is when there is no government at all.
-This is impossible but there are some markets more free then others
What is information failure?
Information failure is when you dont have enough/accurate information which leads to over and under consumption
What is a monopoly?
A monopoly is when one firm dominates the market.
-Has power and can overcharge
What is poverty?
Poverty is when you cant afford all the necessities.
What is inequality?
Inequality is the unequal distribution of wealth/income.
What are public goods?
Public goods are something that would not be provided at all by the markets so governments have to.
-Because of non-excludability
What is non-excludability?
Non-excludability is when the person paying for the benefit can not prevent anyone else from benefiting.
-The ‘free rider problem’
What are subsidies?
Subsidies is money from the government.
What is state provision?
State provision is something provided by the government
What is government failure?
Government failure is when government intervention leads to a worsening of resource allocation (costs of a policy outweighs benefit) .
What are the types of Government failure?
I- Inadequate information
C-Financial cost/ opportunity cost
A- Administrative errors
U- Unintended consequences
S-Self -Interest
E-(Lack of) Expertise
