Gov't and Public Choice
Incentivizes
The two features of a public good
Nonrival and nonexcludable
A firm with _________ is known as a ___________
Market power; monopoly
A factory polluting without paying for the damage is an example of this
Negative externality
When one party in a transaction knows more than the other it is known as this market failure
Asymmetric information
When the government provides things like national defense and parks, it is fulfilling the role of the government to provide these (hint: it is one of the market failures)
Public Goods
This type of good is rival but nonexcludable
Common
When a monopoly raises prices above the efficient level, society experiences this inefficiency
Deadweight Loss
Getting a flu shot benefits others by preventing spread of the flu, this is an example of
Positive externality
A doctor paid per test ordered will order more tests because of this economic problem
Moral hazard
The government can pass these types of laws to promote competition
Antitrust Laws
The overuse of shared resources such as fisheries is known as this
Tragedy of the Commons
This type of monopoly is formed because of large upfront costs and low ongoing costs (extreme economies of scale)
Natural monopoly
Governments can correct negative externalities using these
Taxes
We can reduce the information gap of asymmetric information with these
Review sites (Better incentives also acceptable)
The idea that we should evaluate gov't and market performance with the same scrutiny is known as this
Analytical Symmetry
This type of good is nonrival but excludable
Club Good
Owning all the diamond mines gives a company market power through this source
Hard to duplicate inputs
Governments can encourage positive externalities with these
Subsidies
This language is the most commonly spoken language in India
Hindi
Public Choice Economics assumes that politicians act in this way (hint: it is the same as we assumed for individuals/firms)
In their self-interest
People enjoying a good without paying for it causes this problem
Free Riders
A legal monopoly can result from the government issuing these
Patents
Negative externalities lead to this effect on production in a market
Overproduction
When people hide information about poor-quality goods, the result is this (hint: an offer being made sometimes gives negative information about what is being offered)
Adverse selection