Professional Documents
Culture Documents
Failure
Dennis A. Dolom
Jr.
Government
Failure
This occurs when government intervention
in the economy causes an inefficient
allocation of resources and a decline in
economic welfare.
Politicians
Politicians - a person who is professionally
involved in politics, especially as a holder of or a
candidate for an elected office.
- Politicians may have poor information about
the type of service to provide.
- Politicians may not be experts in their department,
but concentrate on their political ideology.
Voters
Voters - people , citizen of a nation,
whocan
ordoesvote. One who has the right to vote.
- Rational Ignorance
- Rational Abstention
Interest Groups
Interest Groups - an organization of
people who share a common interest and
work together to protect and promote that
interest by influencing the government.
Bureaucracies
Bureaucracies - administratively
organizing large numbers of people who
need to work together.
- Their pursuit of utility can and does
conflict with the efficient implementation
of government policies.
Market Failure
Dennis A. Dolom
Jr.
Market Failure
Public Good
Market Control
Market Control is an attempt to achieve
specified economic or political goals through
the deliberate manipulation of factors such
as supply, demand, pricing, transportation,
or taxation.
Market control arises when buyers or
sellers are able to exert influence over the
price of a good and/ or the quantity
exchange.
Externalities
Externalities are the effects of a decision
on a third party that are not taken into
account by the decision-maker.
Negative externalities occur when the
effects are detrimental to others
Positive externalities occur when the
effects are beneficial to others
Imperfection Information
Government Expenditures
Dennis A. Dolom
Jr.
Government Expenditures
Spending by the government sector
including both the purchase of final goods
and services, or gross domestic product,
and transfer payments.
Government expenditures are used by
the government sector to undertake key
functions, such as national defense and
education.
Purchases
Transfers
In economics, a transfer payment (or
government transfer or simply transfer) is a
redistribution of income in the market
system. These payments are considered to
be non-exhaustive because they do not
directly absorb resources or create output.
Transfer payments are basically gifts,
payments that made without any
expectation of production.