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When are markets unable to satisfy important economic objectives — and does government intervention help?
When are markets unable to satisfy important economic objectives — and does government intervention help?
Conceptual Understandings
Conceptual Understandings
The market mechanism may result in socially undesirable outcomes that do not achieve efficiency, environmental sustainability and/or equity.
Market failure, resulting in allocative inefficiency and welfare loss.
Resource overuse, resulting in challenges to environmental sustainability.
Inequity, resulting in inequalities.
Governments have policy tools which can affect market outcomes, and government intervention is effective, to varying degrees, in different real-world markets.
Price controls
Price controls
Indirect taxes
Indirect taxes
Subsidies
Subsidies
What sounds better? a) "Leave it alone" economics? or b) Laissez Faire Economics? What have we seen so far that might support the conclusion that markets should be left alone?
What sounds better? a) "Leave it alone" economics? or b) Laissez Faire Economics? What have we seen so far that might support the conclusion that markets should be left alone?
Direct provision of services
Direct provision of services
Command and control regulation and legislation
Command and control regulation and legislation
You're more than welcome to create new case studies if you're interested in exploring different applications of these government interventions - and it would be excellent if you shared your insights with the class :)
You're more than welcome to create new case studies if you're interested in exploring different applications of these government interventions - and it would be excellent if you shared your insights with the class :)
FYI you have your own copy of all of these documents in Schoology
PS put on hold exploring indirect tax and cigarettes for now, we do that in the next unit.
Theory of Knowledge Connections
Theory of Knowledge Connections
What knowledge criteria should government policy makers use to make choices between alternative policies?
What knowledge criteria should government policy makers use to make choices between alternative policies?
How can we know when a problem is sufficiently large to justify government intervention?
How can we know when a problem is sufficiently large to justify government intervention?
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