PPT-Market Failures and Role of Government

Inadequate Competition Mergers have resulted in fewer and larger firms This can be good but can also decrease competition which has consequences Inadequate resource allocation Why would a company with no competitors have an incentive to use fewer resources They wouldnt With monopolies the government steps in and regulates utilities like electricity. Yale Braunstein. March 2011. Quick intro to “Consumers Surplus”. Actually, the sum of CS & PS. Consumers gain from price decreases. PS = Profit. Monopoly works by restricting output & raining price, therefore results in “deadweight welfare loss”. Changing the terrain of public discourse. www.publicworks.org. Anika Fassia – . afassia@publicworks.org. Patrick Bresette – . pbresette@publicworks.org. Race and the Role of Government. Living up to this promise has required constant attention to the intersection of race and the role of government. Introduction. When the market fails to achieve an efficient allocation of resources, government intervention can potentially remedy the problem.. However, government intervention may result in more inefficiency. Understanding Public Policy. Announcements. Feb. 2. i>clicker starts counting. Deadline for group formation (if not opting out of it). Today. Why public policy. ?. Class . overview. What . prompts public policy?. Fiscal Policy. Government uses its powers of expenditure, taxation, and borrowing to alter the size of the circular flow of income in the economy to bring about greater consumer demand, more employment, inflationary restraint and other economic goals.. November 2012. Structural Transformation Policies and Economic Growth. Latin America has been doing better (sort of…). Developing country growth . trends . by region, . 1950-2011. Outline. Structural change: why and how it matters. 05. McGraw-Hill/Irwin. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.. Market Failures. Market fails to produce the right amount of the product. Resources may be:. Over-allocated. “. According to the system of natural liberty, the sovereign has only three duties to attend to ... first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, so far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice, and thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain” . Chapter 16. Section . 1: . Government . Intervention in the Economy. Our U.S. economy is a . capitalistic. economy. . Private . citizens . own. and use the factors of production to seek a profit.. Section 2.4 Equity . in the distribution of income. 1. Define . community surplus, social efficiency, and Pareto optimality. Explain that the best allocation of resources from society’s point of view is at competitive market equilibrium, where . A Closer Look at . Economic Efficiency. What is Economic Efficiency?. Economists use the concept of . efficiency . to judge actions because efficient use of resources implies the maximum value of output from the resource base. SSEF5. Overview. Government has an active role in establishing a framework or rules of the game in economic life. . In the United States, this activity involves:. Preserving and fostering competition. Scarcity – The . basic economic problem that arises because people have unlimited wants but resources are limited. The government can protect a free market economy by maintaining a stable currency, tax breaks to proprietorships, law and order…. Unit 2: How Markets Work. Market Failures. Sometimes markets are not able to provide the goods and services desired by consumers or which can be efficiently produced by suppliers. This situation is called a .