A role for the government market failure any situation

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Unformatted text preview: t does not lead to an efficient economic outcome. Government failure: a situation in which the government makes things worse than the market, even though there may be market failure. The Price System The Uses of the Price System in a Market Economy 1. Signals: the price of a good sends a signal to producers to increase or decrease production. 2. Incentives: higher (lower) prices of goods will increase (decrease) the incentives for firms to produce those goods. 3. Distribution: higher or lower worker income resulting from a higher or lower price of the goods or the services they make will affect the distribution of goods and services in the economy....
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This note was uploaded on 06/01/2010 for the course ECON STA2012 taught by Professor Fan during the Spring '10 term at A.T. Still University.

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