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6 Cards in this Set
- Front
- Back
Government failure |
When government intervention leads to an inefficient allocation of resources and a net welfare loss |
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Distortion of price signals |
Distorts the price mechanism so that resources are missllocated |
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Unintended consequences |
Intervention has negative impacts the government don’t expect |
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Excessive admin costs |
Uses lots of money regulating and enforcing |
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Government information gaps |
Intervention that has been made without sufficient information leading to a misallocation of resources |
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4 categories of government failure and examples |
-distortion of price mechanism: minimum prices- common agricultural policy for EU -Unintended consequences: subsidies of energy in developing countries -Admin costs: fishing quotas -Information gaps: fishing quota for EU set too high |