Consumption Problem
The Team will demonstrate an understanding of market failures, externalities, and government intervention by (a) analyzing government intervention, (b) explaining market failures, and (c) relating government intervention to market failures.
(a) Government intervention happens when the government tries to solve an economic problem with their actions or tries to regulate a business. Some of the actions the government can take are implementing a tax, giving subsidies to some industries, setting regulations, cutting taxes in some areas and many more. (McGraw-Hill Education,2015, Online). An example of some government regulation is when the government gives subsidies to the dairy farmers, or they give a tax-pay cut to a business. A few years back …show more content…
Income inequality is measured in five different groups. Income inequality has grown in the United States in the last decades. For example, in the year 2014 in the United States the bottom 90% of the population earned $33,068 in a year; the 0.1% top percent earned $6,087,113 in the same year (Inequality, 2016, Online). In addition to that, between 1979 and 2007, paycheck income of the top 1% of the United States population increase over 256%, however, the paycheck income of the bottom 90% only increased 16.7% from 1979 to 2007 (Inequality, 2016, Online). It seems like the gap just keeps getting bigger and bigger each year. Some economists think that a reason for that might be the change of composition of American families. Now days it seems that is common to see two doctors, or two CEO’s getting married. That pattern of household of two high earnest tends to increase the proportion of high-earning households. In addition to that, single-parent households have increased in the last decades, which usually are at the lower end of income distribution (OpenStax Economics, 2016,
The Team will demonstrate an understanding of market failures, externalities, and government intervention by (a) analyzing government intervention, (b) explaining market failures, and (c) relating government intervention to market failures.
(a) Government intervention happens when the government tries to solve an economic problem with their actions or tries to regulate a business. Some of the actions the government can take are implementing a tax, giving subsidies to some industries, setting regulations, cutting taxes in some areas and many more. (McGraw-Hill Education,2015, Online). An example of some government regulation is when the government gives subsidies to the dairy farmers, or they give a tax-pay cut to a business. A few years back …show more content…
Income inequality is measured in five different groups. Income inequality has grown in the United States in the last decades. For example, in the year 2014 in the United States the bottom 90% of the population earned $33,068 in a year; the 0.1% top percent earned $6,087,113 in the same year (Inequality, 2016, Online). In addition to that, between 1979 and 2007, paycheck income of the top 1% of the United States population increase over 256%, however, the paycheck income of the bottom 90% only increased 16.7% from 1979 to 2007 (Inequality, 2016, Online). It seems like the gap just keeps getting bigger and bigger each year. Some economists think that a reason for that might be the change of composition of American families. Now days it seems that is common to see two doctors, or two CEO’s getting married. That pattern of household of two high earnest tends to increase the proportion of high-earning households. In addition to that, single-parent households have increased in the last decades, which usually are at the lower end of income distribution (OpenStax Economics, 2016,