Ch38 Gov't intervention in microeconomics

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What is a specific tax?

Back

A specific tax is one that is fixed per unit purchased.

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What is an ad valorem tax?

Back

An ad valorem tax is charged as a given percentage of the price.

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What is a regulation?

Back

A regulation is a control imposed by a government or by a regulatory organisation.

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What are property rights?

Back

Property rights are where the owner has a right to decide how an asset may be used.

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What is a pollution permit?

Back

A pollution permit is a type of licence that is given by a government to allow a firm to pollute up to a given level of pollution.

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How do governments provide information to correct market failure?

Back

Governments provide information to correct market failure, for example, through the over consumption of demerit goods.

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What is the purpose of ‘nudge’ theory?

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The purpose of ‘nudge’ theory is to prompt individuals into making more effective decisions, for example, in relation to consumption.

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What is government failure?

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Government failure occurs where government intervention to correct market failure leads to a net loss of economic welfare.