Government Failure (Edexcel A-Level Economics A): Flashcards
📚Flashcards
Practise the cards
10 cards from this deck
ShowHide
Practise the cards
10 cards from this deck
Definition of government failure
Definition of government failure
Intervention creates worse resource allocation than original problem
Four main causes of government failure (mnemonic)
Four main causes of government failure (mnemonic)
DICE: Distortion, Information gaps, Consequences, Excessive costs
What prices act as in an economy
What prices act as in an economy
Signals to guide resource allocation
Effect of govt intervention on price signals
Effect of govt intervention on price signals
Moves prices away from market equilibrium, distorts allocation
Unintended consequences in govt policy
Unintended consequences in govt policy
Knock-on effects across markets not anticipated in design
When do excessive admin costs cause govt failure?
When do excessive admin costs cause govt failure?
When implementation costs exceed benefits of intervention
Why information gaps cause govt failure
Why information gaps cause govt failure
Lack of accurate data leads to poorly targeted/calibrated policies
Key cost-benefit test for govt intervention
Key cost-benefit test for govt intervention
Marginal costs must not exceed marginal benefits
UK sugar tax levy rates (2018)
UK sugar tax levy rates (2018)
18p/litre (>5g/100ml), 24p/litre (>8g/100ml)
UK sugar tax revenue: estimated vs actual
UK sugar tax revenue: estimated vs actual
Originally £520m estimated, fell to £240m by implementation