1. What would happen if the Government left road-building up to citizens or private companies? What problems might arise? (list 3) Warm-up

2. Providing Public Goods Ch 3.3

3. Public Good A public good is a ______ good or service for which it would be __________ or impractical to make consumers pay individually and to _______ nonpayers. A public good is a ______ good or service for which it would be __________ or impractical to make consumers pay individually and to _______ nonpayers. Would you pay a bill for the launch of the space shuttle? Or the cleaning of Mount Rushmore? Would you pay a bill for the launch of the space shuttle? Or the cleaning of Mount Rushmore?shared inefficient exclude

4. Public Goods The government collects ______ in order to fund projects in the public interest. The government collects ______ in order to fund projects in the public interest. taxes

5. National Parks If a park were _______ owned, the owner could charge admission. Yet some benefits would still be enjoyed by nonpayers. Any number of consumers can use public goods without _______ the benefits to any single consumer. And increasing the number of _________ does not increase the cost. If a park were _______ owned, the owner could charge admission. Yet some benefits would still be enjoyed by nonpayers. Any number of consumers can use public goods without _______ the benefits to any single consumer. And increasing the number of _________ does not increase the cost.privately reducing consumers

6. Costs and Benefits When a good or service is ______ When a good or service is ______ 1. The benefit to each individual is ____ than the cost that each would have to pay if it were provided ________ 1. The benefit to each individual is ____ than the cost that each would have to pay if it were provided ________ 2. the total _______ to society are _______ than the total cost 2. the total _______ to society are _______ than the total cost When the ______ does not provide the good, the ____________ must. public less privately benefitsgreater market government

7. Public goods are financed by the public sector, the part of the economy involving the government. Public goods are financed by the public sector, the part of the economy involving the government. The ______ sector is the part of the economy that involves __________ of individuals and businesses has __________ to produce public goods. The ______ sector is the part of the economy that involves __________ of individuals and businesses has __________ to produce public goods. private transactions no incentive

8. Free-Rider Problem Free rider is someone who would ____ choose to pay for a certain good or service, but would get the ________ of it anyway if it were provided as a public good. Free rider is someone who would ____ choose to pay for a certain good or service, but would get the ________ of it anyway if it were provided as a public good. Army helmets, fire protection, roads… Would you pay? Army helmets, fire protection, roads… Would you pay? Free riders ________ what they do not pay for. This problem suggests that if the government stopped collecting _____ and relied on _________ contributions, many public services would have to be __________. not benefits consume taxesvoluntary eliminated

9. Market Failure A situation in which the market does not ___________________________. A situation in which the market does not ___________________________. When externalities are present, we have a ____________, because the costs or benefits of a good or service are not assigned properly. When externalities are present, we have a ____________, because the costs or benefits of a good or service are not assigned properly. distribute resources efficiently market failure

10. Externality The __________ side effect of a good or service that generates _____________ to someone other than the person deciding how much to produce or consume The __________ side effect of a good or service that generates _____________ to someone other than the person deciding how much to produce or consume __________ may be positive or negative. __________ may be positive or negative.economic benefits or costs Externalities

11. Positive Externalities Benefit of a good gained by someone who ______ purchase it Benefit of a good gained by someone who ______ purchase it Ex. Buy a old beat up house & remodel and beautify the outside Ex. Buy a old beat up house & remodel and beautify the outside Hire underprivileged teens and train them Hire underprivileged teens and train them Protection of endangered species Protection of endangered species Give me 2 more examples Give me 2 more examples did not

12. Negative Externalities Cost of producing a good or service is paid for by someone _____ than the producer adding ___________ costs Cost of producing a good or service is paid for by someone _____ than the producer adding ___________ costs Ex. Exxon Valdez leaks millions of gallons of oil in the ocean Ex. Exxon Valdez leaks millions of gallons of oil in the ocean Your neighbor plays the accordion and holds Friday Polka parties…you hate polka Your neighbor plays the accordion and holds Friday Polka parties…you hate polka other unintended

13. Government Goals Govt tries to _____ negative externalities Govt tries to _____ negative externalities Antipollution devices in cars called catalytic converters & EPA to decrease acid rain Antipollution devices in cars called catalytic converters & EPA to decrease acid rain Govt encourages _______ externalities Govt encourages _______ externalities EDUCATION EDUCATIONlimit positive

14. Ch 3.4 Providing a Safety Net

15. Poverty Poverty threshold is when income level is ______ that which is needed to support families or households Poverty threshold is when income level is ______ that which is needed to support families or households The free market system generates wealth but the wealth is spread _______ throughout society. The free market system generates wealth but the wealth is spread _______ throughout society. below unevenly

16. The Census Bureau's poverty thresholds for 2006 One person (unrelated individual)$10,294 One person (unrelated individual)$10,294 Under 65 years$10,488 Under 65 years$10,488 65 years and over$9,669 65 years and over$9,669 Two people$13,167 Two people$13,167 Householder under 65 years$13,569 Householder under 65 years$13,569 Householder 65 years and over$12,201 Householder 65 years and over$12,201 Three people$16,079 Three people$16,079 Four people$20,614 Four people$20,614 Five people$24,382 Five people$24,382 Six people$27,560 Six people$27,560 Seven people$31,205 Seven people$31,205 Eight people$34,774 Eight people$34,774 Nine people or more$41,499 Nine people or more$41,499

17. Welfare System The government eases poverty by collecting ____ from individuals and __________ some of those funds in the form of welfare. The government eases poverty by collecting ____ from individuals and __________ some of those funds in the form of welfare. Welfare is a general term that refers to government ___ for the poor. Welfare is a general term that refers to government ___ for the poor. The nation’s welfare system began under President ___ after the great depression. The nation’s welfare system began under President ___ after the great depression. taxes redistributing aid FDR

18. Redistribution Programs Cash _______ are direct payment of money to the __________________________. Cash _______ are direct payment of money to the __________________________. Temporary Assistance for Needy Families Temporary Assistance for Needy Families Social Security Social Security Unemployment insurance Unemployment insurance Workers Comp Workers Comp Transfers poor disabled and retired people

19. In-Kind Benefits Goods and services provided for ____ or at greatly reduced prices Goods and services provided for ____ or at greatly reduced prices Food Stamps Food Stamps Subsidized housing Subsidized housing Legal aid Legal aid free

20. Medical Benefits The U.S. provides health insurance for the _______ and the disabled and the poor. The U.S. provides health insurance for the _______ and the disabled and the poor. Medicare covers Americans over the age of ___ and the disabled. Medicare covers Americans over the age of ___ and the disabled. Medicaid covers poor people who are __________ or not covered by their employers insurance plans. Medicaid covers poor people who are __________ or not covered by their employers insurance plans. elderly 65 unemployed

21. Education Education add to the nation’s ____________ and labor productivity. Education add to the nation’s ____________ and labor productivity. human capital

22. Faith-Based Initiatives George W. Bush announced an initiative to rely on ______________ support for people in need George W. Bush announced an initiative to rely on ______________ support for people in need He believes that religious organizations are among the ______________ groups delivering social services. He believes that religious organizations are among the ______________ groups delivering social services. Thus, these organizations will be allowed to _______ for ____________. Thus, these organizations will be allowed to _______ for ____________. non-governmental most successful compete federal funds

23. Teens CASH Merchants who once saw trouble in teens congregating in front of their stores now see _________, as teens have emerged as an _______ force behind everything from fashion to entertainment to hair care. Today's teens are so different. Kids start making buying decisions ______ than other generations. By the time they are teens they are incredibly _____________________. Merchants who once saw trouble in teens congregating in front of their stores now see _________, as teens have emerged as an _______ force behind everything from fashion to entertainment to hair care. Today's teens are so different. Kids start making buying decisions ______ than other generations. By the time they are teens they are incredibly _____________________. dollar signs economic earlier sophisticated consumers

24. Activity Draft a proposal for a public good that would benefit the students of CHHS Draft a proposal for a public good that would benefit the students of CHHS Write a convincing proposal that includes: Write a convincing proposal that includes: Detailed description of the project Detailed description of the project A list of the benefits A list of the benefits An analysis of the cost An analysis of the cost An explanation of why benefits exceed costs An explanation of why benefits exceed costs