Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
19 Cards in this Set
- Front
- Back
|
Roles of Government
|
1) Establish suitable FRAMEWORK
2) Provide collective PUBLIC GOODS AND SERVICES 3) Correct for EXTERNALITIES 4)Promote COMPETITION 6) REDISTRIBUTION OF INCOME and WEALTH |
|
|
Establish suitable framework
|
establish PROPERTY RIGHTS and enforce them
establish CONTRACT law system system of WEIGHTS/MEASURES MONETARY system |
|
|
Property rights
|
right to use, sell, and modify
|
|
|
Provide public goods and services
|
street lights broadcast radio/tv
two defining factors zero-marginal cost free-rider problem free market under produces public goods- inefficient |
|
|
zero marginal cost
|
additional users can benefit at no additional cost to user
|
|
|
free rider problem
|
there is no profitable way possible to exclude non tax payers
|
|
|
correct for externalities
|
externality is an uncompensated gain or loss imposed on one by the maximizing behavior of another
example- air pollution all have the right to use air but heavy pollution shows how free market fails |
|
|
monopoly
|
single seller
|
|
|
monopsony
|
single buyer
|
|
|
anti trust laws
|
promote competition
outlaw some practices- conspiracy in restraint of trade (price fixing agreements), tying contracts, predatory pricing |
|
|
oligopoly
|
a few sellers
|
|
|
oligopsony
|
a few buyers
|
|
|
conspiracy in restraint of trade
|
price fixing agreement
|
|
|
tying contracts
|
buying one product and needing additional products as well separately
|
|
|
predatory pricing
|
lower price under value to drive out competition and then raise price and now in control of market
|
|
|
redistribution of income
|
progressive tax
regressive tax proportional tax |
|
|
progressive tax
|
richer taxed more, fraction taxed increases more when income increases
|
|
|
regressive tax
|
less rich pay higher percent in taxes.. after certain point.. no more taxes for rich after certain amount (example 117k)
|
|
|
proportional tax
|
flat rate tax for all
|
