Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 5, Problem 14CQ
To determine
Explain when the government intervention is considered economically efficient and when it is not.
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Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- As the Great Depression began in 1929, and millions of Americans found themselves in a terrible economic position, President Herbert Hoover was reluctant to involve the government in directly helping people. This decision helped lead to his loss in the presidential election of 1932. Put yourself in Hoover’s shoes—what reasons would he have for being opposed to large-scale government involvement in the economic lives of Americans? What reasons could be given for the government getting involved?arrow_forwardHow can government prevent market failure?arrow_forwardAnalyse the role of market failure as a justification for government intervention.arrow_forward
- Why couldn't an economy function without government intervention?arrow_forwardHow do government failures provide rationale and justification for public policy?arrow_forwardKnowledge creates positive externality; therefore, governments should intervene in the education sector. What is the intervention action of governments for efficiency to gain from external benefits? Please explain each of these interventions with a clear example for each.arrow_forward
- Is education a public good? Does education have external benefits? If so, what are some of those public benefits? In your opinion are the external benefits large or small? Why? What should government do to promote the efficient provision of products that have external benefits? If you think that government should put more resources into education, what might be some of the opportunity costs of that decision? How would an economist determine the right amount of government support for education?arrow_forwardThe government uses several tools to implement environmental regulation. For example, mandatory production standards are designed to prevent companies from damaging a public good such as air or water. Emission taxes that create financial incentives for industries to reduce known pollutants, for example, from oil and coal production, are used to reduce negative externalities. The government can also force a company that causes an environmental problem to clean it up, thus solving the free rider problem. Nevertheless, government regulation imposes costs on society: Higher production costs due to regulation may be passed on to households in the form of higher prices, which—if large enough—can harm the economy. Legislation and its enforcement increase the size and cost of government. What type of analysis does government engage in to protect public goods? Explain using economic terms. What is government goal?arrow_forwardWhat are “public goods”? Pick a government good/service that you consume, define what makes it a public good (how is its non-rival and non-excludable). As we discussed in class, the existence of externalities creates an efficiency problem in the provision of these goods and services. Unlike the private sector, State and Local Governments can intervene. Using the example of the public good, you have provided, please provide an example of an externality that will impact its provision, and detail how a government could/should intervene.arrow_forward
- Describe one function of government in the economy other than correcting externalities. Provide an example.arrow_forwardIn general, what are some of the tactics the government uses to correct market failure? List 3 and provide a brief explanation of the opportunity costs involved in correcting these failures.arrow_forwardWhat is an externality? What are the possible remedies (private or government) to externalities?arrow_forward
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