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WorksheetsGovernment Failure - Economics
Total questions: 10
Worksheet time: 7mins
Select the most appropriate methods of government intervention to correct the market failure associated with missing markets
subsidies
direct provision
indirect taxation
minimum prices
Select the correct group of characteristics associated with merit goods
non-excludable, non-rival, non-exhaustible
non-excludable, non-rival, non-diminishable
excludable, non-rival, non-exhaustible
non-excludable, exhaustible, rival
Select the two suitable interventions that are most likely to achieve the government objective of extending property rights in the event of oil pollution of the seas caused by a ship running aground off the UK coast.
Legislation
Compulsory Insurance
Compensation schemes
Direct taxes
Which "law" explains why government interventions are inevitably limited in their total success?
the law of diminishing returns
the law of unintended consequences
the law of diminishing utility
the law of aprocryphal outcomes
Which of the following government interventions can be seen as government failure as a result of their being inadequate or imperfect information available to the government at the time the decisions were being made?
The Brexit referendum
The decision to build the high speed railway HS2
Joining the EU common fisheries policy in the 1970s
Commissioning the new nuclear at Hinckley Point
Why might the introduction of Minimum Wage legislation distort the labour market in a way that could be described as government failure?
It way help to alleviate the problems associated with in-work poverty
It may give the unemployed an incentive to take a low-paid job
It may result in higher levels of unemployment that disproportionately impacts the low-paid
It may improve productivity as firms invest in automation
In what two ways might the decision to maintain the annual increase in State pensions (by the higher measure of inflation, RPI), be an example of government failure?
The Law of Unintended Consequences
Excessive administrative costs
Information gaps
Conflicting objectives
Public choice theory
Which of the following might be considered as an example of Public Choice Theory
Governments funding the expansion of Heathrow Airport
Allowing bankers to self-regulate their own industry's behaviour
Always weighing up the options so that decisions inevitably maximise economic welfare
Ensuring interventions always represent value for money
Which unintended consequence made the UK government's decision to intervene in the tobacco market in 2007 (banning smoking in public places and increasing tobacco duty) a monumental fail?
The decrease in over 16s smoking decreased from 21% to 17%
21% of tobacco consumed in the UK is smuggled into the country
The fall in respiratory illness reported by bar workers following the ban
The decrease in the incidence of men dying from lung cancer
Which of the politicians pictured might be accused of using high public office to maximise their own welfare at the expense of the economic welfare of the country they have led?
