chapter 16 government and markets

chapter 16 government and markets - Chapter 16: Markets and...

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Chapter 16: Markets and Governments’ Role in Economic Efficiency The objectives of this chapter are to: 1. Explain how the legal and regulatory system can contribute to the economic efficiency of markets. 2. Define market failure and describe the situations that give rise to market failure. 3. Explain how government intervention can reduce market failure. 4. Classify goods as pure private, pure public, marketable public or common resource, based on the characteristics of rivalry and excludability. 5. Define the tragedy of the commons. An economic system has to solve three coordination problems:
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I hope we answered those questions. All economic knowledge can be boiled down to a single phrase: There ain’t no such thing as a free lunch. Every decision has an opportunity cost – the cost in foregone opportunities.
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Society can produce more output if: 1. 2. 3. The Legal System Economic role of law Criminal law People channel their efforts into mutually beneficial, voluntary exchanges Property law People find the most productive uses for their property Contract law Productive activity and exchange Tort law Protect consumers from unsafe products Protect businesses from unreasonable liabilities
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Antitrust law Prevent businesses from engaging in behavior that limits competition and harms consumers Regulation: Directs businesses To take some specific actions Prohibits actions Often: case-by-case basis Protects Buyers Sellers Third parties
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Market Failures: Market is economically inefficient when the following are
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This note was uploaded on 04/02/2012 for the course MGE 302 taught by Professor Isse during the Spring '08 term at SUNY Buffalo.

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chapter 16 government and markets - Chapter 16: Markets and...

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