Government Failure
- Created by: jacksie
- Created on: 25-05-21 09:56
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- Government Failure
- Distortions of Price
- Govt may place tariffs on imported agriculture
- this is so that high cost farmers in the uk are not cut out of the market
- However domestic consumers may have to pay higher prices
- And land may be used inefficiently
- another good could be grown
- And land may be used inefficiently
- Help lower income
- rise minimum wage
- may price people out of work
- rise minimum wage
- Govt may place tariffs on imported agriculture
- Law of unintended consequences
- Common Agricultural policy in 1962
- aim to boost agricultural productivity
- 1980s
- EU budget was spent on CAP
- Increased prices if it was not implemented
- EU budget was spent on CAP
- Depressed world prices of agricultural goods
- EU bought goods at the minimum price
- sold these on to the world market below the price
- Developed countries could not earn of enough
- developing countries could not compete with low EU prices
- Developed countries could not earn of enough
- sold these on to the world market below the price
- EU bought goods at the minimum price
- 1980s
- aim to boost agricultural productivity
- Common Agricultural policy in 1962
- Excessive administrationcosts
- The cost of administering a policy does not outweigh the social welfare
- information gaps
- The government like most economic agents may not posses
- all the relevant data
- the benefits of spending on infrastructure
- all the relevant data
- The government like most economic agents may not posses
- Conflicting objectives
- The government may wish too cut taxes
- but increasing spending on Defence
- Decrease inflation, but boost growth
- what happens to interest rates
- Opportunity cost of implementing a policy
- one policy may have a higher welfare than the other
- The government may wish too cut taxes
- Untitled
- Distortions of Price
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