2nd setof policy lecture slides

2nd setof policy lecture slides - Types of Economies •...

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Unformatted text preview: Types of Economies • Planned. Government decides what to produce, how much, and when. • Problem: Extremely complex decisions. Generally, the system collapses because it is impossible for the relatively small planning group to have perfect information on each individuals needs (let alone wants.) Types of Economies • Capitalism. Each individual gets rationing coupons (money) to vote for what to produce, how much, and when. • Problem : Market failure. Actual mix of output differs from the one society is willing to accept. Imperfect resource allocation efficiency. ( Remember rational self interest vs. public interest) Types of Economies • Mixed Capitalism . Government policies attempt to correct resource allocation inefficiency. (Where both planned and economies have tended to end up.) Reasons for Market Failure • Public, Collective vs. Private Goods • Externalities • Imperfect Information, (or difficulty and redundancy of collecting information on the part of individuals) Public vs. Private GoodsPublic vs....
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2nd setof policy lecture slides - Types of Economies •...

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