Providing Public Goods Ch 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. Would you pay a bill for the launch of the space shuttle? Or the cleaning of Mount Rushmore? shared inefficient exclude

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

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. privately reducing consumers

Costs and Benefits 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 ________ 2. the total _______ to society are _______ than the total cost When the ______ does not provide the good, the ____________ must. public less privately benefits greater market 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. private transactions no incentive

Free-Rider Problem not benefits 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? 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 __________. benefits consume taxes voluntary eliminated

IS airport security a public good? Before September 11th _______ were responsible for airport security – in Europe the government is responsible…now airplanes are seen as________, thus the benefits go beyond the airline and the ___________ is involved airlines weapons government

Market Failure 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. distribute resources efficiently market failure

Externality 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. economic benefits or costs Externalities

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

Negative Externalities 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 Your neighbor plays the accordion and holds Friday Polka parties…you hate polka other unintended

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

Ch 3.4 Providing a Safety Net

Poverty 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. below unevenly

The Census Bureau's poverty thresholds for 2016 One person (unrelated individual) Under 65 years$12,486;  65 years and over $11, 511 Two people $16,072   under 65 years ; 65 years and over $14,507 Three people $18,774 Four people $24,775 Five people $29,854 Six people $34,337 Seven people $39,509 Eight people $44,188 Nine people or more $53,155

Welfare System 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. The nation’s welfare system began under President ___ after the great depression. taxes redistributing aid FDR

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

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

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

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

Faith-Based Initiatives 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. Thus, these organizations will be allowed to _______ for ____________. non-governmental most successful compete federal funds