Microeconomics - Government Failure (potential evaluation points)
- Created by: sophialucas091101
- Created on: 13-02-19 10:31
View mindmap
- Information Failure (imperfect info)
- Micro - Government Failure (Potential Evaluation Point)
- Admin and Enforcement Costs can be very high
- Regulations
- Subsidies
- Firms may become overly dependant on subsidies, which could lead to them to be more wasteful in their production
- State Provision (education, housing, health)
- Excess Demand - the NHS for example
- Price Control
- Enforcing as well as tending to the problems price control can cause
- Unintended Consequence
- Black Market
- Due to high taxes for example. (e.g. cigarettes and alcohol)
- The negative impacts on the poor
- Very high taxes, less disposable income
- Negative impacts on firms
- Overly regulated / strict. Additionally tax could decrease the size of the firm or shut it down. Could also cause unemployment
- Employment
- lower rates of employment?
- Black Market
- Regulatory Capture
- This is when the interest of those in society are overlooked for the interest of CEO's and big firms
- Occurs when firms influence the regulators to reduce the extent of the regulations (maybe if they know them) therefore working in the interest of the firm. Not society.
- This is when the interest of those in society are overlooked for the interest of CEO's and big firms
- When the costs of Govt. Intervention outweighs the benefits
- The end result could worsen the allocation of scarce resources, further harming the social welfare.
- Admin and Enforcement Costs can be very high
- If the government is not valuing goods and services properly, due to lacking information, this may lead to wild polices that are too strict / high / relaxed / low
- Not always making sure the quantity of externalities are at their optimum level
- Micro - Government Failure (Potential Evaluation Point)
Comments
No comments have yet been made