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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Is market failure either necessary or sufficient for government intervention?
Why does government intervention become necessary in the situation of market failure?
What challenges and opportunities would arise from higher and lower degrees of government intervention?
Chapter 5 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- Under what conditions might government intervention in an economy improve a market outcome?arrow_forwardIn the presence of market failure ,the argument for government intervention is only compelling but not always beneficial. True or false, and explainarrow_forwardHow can government prevent market failure?arrow_forward
- What is the definition of totalitarianism?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 is one function of the government other than correcting externalities?arrow_forward
- Describe how government intervention affects the supply and demand equilibrium. by using the two illustrations above.arrow_forwardCan a company be guaranteed all of the social benefits of a new invention? Why or why not?arrow_forwardIdentify a newspaper article that illustrates a market failure in Barbados. Ensure that you provide a screenshot of the article in your submission. NOTE: Only the following market failures should be examined: public good, asymmetric information, positive or negative externality. Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. How will the imposition of the chosen government policy impact consumersurplus, producer surplus and total surplus in this scenario?arrow_forward
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