ECON 101 Chapter 16: Econ 101 Chapter 16 - Government Intervention and Market Failures

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17 Nov 2016
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Chapter 16 - market failures and government intervention. An institution thats been around so long must do something unique. Violent acts can be conducted by military or police. Or judicial system the gov"t can deprive people of their liberty. For this reason gov"t that are successful have systems of checks and balances to keep the govt in check. When the government"s monopoly of violence is secure and functions with effective restrictions against its arbitrary use, citizens can safely carry out their ordinary economic and social activities. Allows for coordination without anyone needing to understand how the whole system works. Bene t to this market is that it gives automatic signals as a situation develops. In market economy, people risk their time in money of earning pro t. Central planning has to put eggs all in one basket,, risky stuff. Even with large corporations , they are constrained by competition of other large rms and emergence of new products.

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