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Principles of Economics- Mankiw (5th) 325

Principles of Economics- Mankiw (5th) 325 - CHAPTER 15 M O...

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CHAPTER 15 MONOPOLY 335 fall short of the ideal economy—a difference called “market failure.” In my view, however, the degree of “market failure” for the American economy is much smaller than the “political failure” arising from the imperfections of economic policies found in real political systems. As this quotation makes clear, determining the proper role of the government in the economy requires judgments about politics as well as economics. QUICK QUIZ: Describe the ways policymakers can respond to the inefficiencies caused by monopolies. List a potential problem with each of these policy responses. Council members claim they’re try- ing to prevent vans from causing acci- dents and traffic problems, although no one who rides the vans takes these protestations seriously. Vans with accred- ited and insured drivers like Cummins are no more dangerous or disruptive than taxis. The only danger they pose is to the public transit monopoly, whose union leaders have successfully led the cam- paign against them. The van drivers have refuted two
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