Occurs whenever the government intervenes in the market mechanism.
Occurs whenever the government pursues laissez-faire policies
Occurs whenever an imperfection in the market mechanism prevents optimal outcomes.
Control the structure of an industry only
Alter industry behavior only.
Prevent monopolies from forming.
Control the structure of an industry and alter industry behavior
Local telephone companies.
Consumers would lose because of less competition.
Producers would be better off because they would have greater market share.
Society would be worse off because the economies of scale would be destroyed.
Workers would be worse off because fewer jobs would be available.
Cost of production should fall as the smaller firms become more efficient.
Price charged by the competitive firms should decrease as the firms become more efficient.
Price charged by the competitive firms should increase because the firms will be less efficient.
. Total production for the industry should increase because of the efficiency generated by increased competition.
Average total costs increase
Allocative efficiency is achieved
Economic profits are reduced
Lose money and go out of business.
Earn only normal profits.
Earn economic profits.
Earn less of a profit than before, but still earn a profit.
Taxpayers dislike this use of their tax dollars.
Private companies are less efficient than public companies.
The companies have no incentive to limit costs.
The companies will allow product quality to decline.
That perfectly competitive firms would choose.
Where MR = MC.
Greater than its profit-maximizing choice.
Where MR equals zero.
Technical efficiency is achieved.
The net effect of government intervention on society is definitely beneficial.
Government intervention still may not be justified if the economic costs are too high.
Allocative efficiency is achieved.
Dealing with a natural monopoly.
There is market power.
Government intervention fails to improve economic outcomes.
Public goods are present.
An administrative cost of regulation.
An efficiency cost of regulation.
A compliance cost of regulation.
An equity cost of regulation.
Compliance costs of regulation.
Administrative costs of regulation.
Budgetary costs of regulation.
Efficiency costs of regulation.
Marginal benefit of regulation exceeds its marginal cost.
Economic cost of regulation exceeds the value of the improvements in government intervention.
Value of government failure exceeds the value of market failure.
Intervention improves market outcomes, regardless of costs.
Perfect markets and perfect government intervention.
Perfect markets and imperfect government intervention.
Imperfect markets and perfect government intervention.
Imperfect markets and imperfect government intervention.
Shift toward the origin
Upward sloping to the right
Downward sloping to the right
Increasing opportunity cost of labor.
Increasing marginal utility of income.
Decreasing value of leisure time forgone.
Constant marginal utility of income.
Encourages people to consume less leisure.
Will shift the labor supply curve rightward.
Will lead to a movement up along the existing supply curve.
Encourages people to work less hours.
Law of diminishing marginal utility.
Law of diminishing marginal leisure.