What is the government’s role?

Protection Through regulation or government intervention in a market Examples -Producers must provide information -Laws: Zoning laws, etc. -Patents & copyright -Federal & state agencies FDA, OSHA, EPA, etc.

Downside of Regulation Costly to implement requirements Slows growth b/c cuts into profits Limits competition Increase in government spending ***Leads to deregulation or removal of some government controls

What is a Public Good? A shared good/service for which it would be impractical to make consumers pay individually & to exclude nonpayers Examples – roads and dams Characteristics -Collect taxes: simplifies funding -Should be available to all: roads, parks -Numerous users does not reduce benefit

How to be a public good? Cost less than if provided by a private company Total benefits to society greater than total cost

Market Failure A situation in which the market does not distribute resources efficiently Examples: a. Free riders – Benefits from the good even though didn’t pay for it b. Private company building roads

Safety Net Federal, state & local government programs to help raise people’s standard of living Examples -Social Security -Unemployment insurance -Workers’ compensation -Medicare/Medicaid