1. Standard
SSEF5a. Explain why the gov’t provides public goods and services, redistributes income, protects private property rights, and resolves market failures.
SSEF5b. Give Examples of gov’t regulation and deregulation and its effects on consumers and producers

2. Role of the Government in a Mixed-Market Economy:
Provide public goods and services
Redistribute income
Protect private property rights
Resolve market failures
Maintain Competition

3. Public Goods and Services
Public goods and services: provided by the government when the private market is unable or unwilling to produce the good.

4. 2 Characteristic of a public good
Shared Consumption:
The consumption of the good by one person does not diminish the satisfaction by another person who consumes the exact same good.
Example: Interstates
Non-Exclusion:
It is nearly impossible to keep a person who is unwilling to pay from enjoying the benefits of the public good.
Example: National defense

5. Examples of Public G & S

6. Redistribution of income
taking tax money from those who make a higher income and giving it to lower income citizens through transfer payments.

7. Redistribution of income
Transfer Payments:
a payment made to individuals by the federal government through various social benefit programs.
Payments subsidize the income of recipients to allow the consumption of necessities.
Examples:
Welfare
Social Security
Food Stamps
Medicaid/Medicare

8. Protect Private Property
Private Property Rights:
Laws created by governments that regulates how individuals can control, benefit from and transfer property. 
Essential in a market or mixed-market economy
Businesses will not expand or invest without rights to their own property.
Includes intellectual property such as:
Copyrights
Patents
Legal documents (real estate, cars, etc.)

9. Market Failure Market Failure:
Occurs when the private market is unable to produce goods or services in a way that the benefits society

10. Market failure A market failure can happen when (there is):
Inadequate Competition (businesses have to much “market power”)
Buyers and sellers are NOT well informed
Resources do not move easily from one industry to another
Unreasonable Prices
Externalities

11. Correcting Market Failures
Externalities – when a third party benefits or is hurt from the production or consumption of a good or service.

12. Externalities:
Positive Externalities – when a third- party benefits from the production or consumption of a good/service.
Example: your new college roommate plays their iPod full o fall your favorite songs. You enjoy it even though you didn’t have to pay for it.

13. Externalities:
Negative Externality – when a third party is harmed by the production or consumption of a good/service.
Example: industries that cause air pollution during the production of a good or service.

14. Market Power: Maintaining competition
Market power refers to a market failure resulting from the formation of monopoly or oligopoly market structures.
Monopoly: One seller
Oligopoly: Few sellers

15. Market Power: Maintaining competition
The government uses regulation and deregulation to make sure industries stay competitive.
Regulation-tighter restrictions and rules companies must follow
Deregulation- relaxing rules and laws companies must follow

16. Examples Regulation Deregulation FDA-food and drug safety
EPA- environmental safety
FDIC- protection within the banking system
18th Amendment
Banks (re-regulated in early 2000’s)
Phone Companies
Banks (deregulated in 1980’s)
Airlines
21st Amendment
Regulation
Deregulation

17. Activity:
Public or Private good?

18. Public of private good? Make this chart on your paper:
Cannot Share Consumption
Shared Consumption
Can Be Excluded
Cannot Be Excluded

19. Place the following items in the grid:
College education
Electric power
Haircut
National Defense
Six Flags
Mosquito treatment
Cable television
Canine rabies shot
Street lights
Panama Canal
Public toll roads
Police protection
Health care
National forest campground
Potato Chip
Auto airbags

20. Go to Flipchart: