Cards (15)

    • Government failure occurs when government intervention in the market results in a less efficient allocation of resources
    • Poor information is a primary cause of government failure.
    • What is an example of government failure mentioned in the study material?
      Rent controls
    • Factors contributing to government failure
      1️⃣ Poor information
      2️⃣ Unintended consequences
      3️⃣ Bureaucratic inefficiencies
      4️⃣ Political objectives
    • Unintended consequences of government policies may include unforeseen and negative impacts
    • Rent controls can lead to a shortage of affordable housing due to unintended consequences.
    • What is an unintended consequence of minimum wage laws?
      Increased unemployment
    • Agricultural subsidies can lead to distorted market prices
    • Policies driven by political objectives often disregard economic efficiency
    • What is an unintended consequence of rent controls?
      Increased black market
    • Minimum wage laws can result in higher prices for consumers.
    • Match the policy with its negative consequences:
      Rent Controls ↔️ Shortage of rentals, deteriorated housing quality
      Agricultural Subsidies ↔️ Overproduction, distorted prices, environmental damage
    • What is a strategy to mitigate government failure?
      Improved information
    • Policies should be adaptable to changing circumstances
    • Strategies to mitigate government failure
      1️⃣ Improved Information
      2️⃣ Policy Flexibility
      3️⃣ Cost-Benefit Analysis
      4️⃣ Independent Evaluation
      5️⃣ Citizen Engagement
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