1. http://apeconomics.ncee.net Unit 5 : Microeconomics National Council on Economic Education The Economic Functions of Government Enforce Laws and Contracts. Maintain Competition. Redistribute Income. Provide an Economic Safety Net. Provide Public Goods: Nonexclusion Shared consumption Correct Market Failures: Provide market information Correct negative externalities Subsidize goods with positive externalities Stabilize the Economy: Fight unemployment Encourage price stability Promote economic growth

2. http://apeconomics.ncee.net Unit 5 : Microeconomics National Council on Economic Education Illustrating a Negative Externality

3. http://apeconomics.ncee.net Unit 5 : Microeconomics National Council on Economic Education Illustrating a Positive Externality

4. http://apeconomics.ncee.net Unit 5 : Microeconomics National Council on Economic Education Key Ideas in Public-Choice Economics Is it rational for government leaders to favor special interests over the general public? Concentrated vs. special interests Information costs Why are politicians mainly in the middle of the road? Median-voter model of political behavior Are people rational or irrational when they spend little time evaluating candidates before they vote and when they don’t vote? What is the effect of bureaucratic entrepreneurs on government?