Role of Government in a Market Economy SSEF5 The student will describe the roles of government in a market economy. a. Explain why government provides public goods and services, redistributes income, protects property rights, and resolves market failures. b. Give examples of government regulation and deregulation and their effects on consumers and producers.

Protecting Private Property Rights The Role of Government Use p. 42-43 in the EOCT Coach book. Write3-4 your section. Description, examples Protecting Private Property Rights Promoting competition Providing Public Goods/Services Resolving Market Failures Redistributing Income Regulation and Deregulation

Protecting Private Property Rights Protects private property and intellectual property through laws, contracts, patents, and copyrights Key component of a market economy that is based on private ownership and voluntary exchange Disputes settled by judicial system

Provides Public Goods and Services The benefits of public goods are shared by everyone in a society. The government pays for public goods by collecting taxes There is no incentive for private companies to provide public goods Examples: roads, schools, national defense, police/fire dept., parks

Redistributing Income Taxes pay for transfer payments – supplement those who have lower incomes or cannot work Those who earn more are taxed more Gov’t maintains a min. standard of living for citizens Examples – welfare, food stamps, Social Security, disability, unemployment, WIC, Medicaid

Promoting Competition Market economy depends on free competition to keep prices low and quality high Prevents monopolies and trusts Example – AT&T

Resolving Market Failure Occurs when a private company benefits from production for which other people end up paying some of the costs Unintended consequenses Pollution, BP/Gulf of Mexico Spill Regulations result from resolving market failures

Regulation and Deregulation Using laws to control business activity Intended to benefit the public (protect consumers) Regulation – making a law that restricts companies Deregulation – taking the law or restriction away Examples – breaking up monopolies, fining polluters, taxes on alcohol and tobacco, safety regulations

Writing Assignment ½ - 3/4 of a page Write a story or a narrative about what life in the United States would be like if there was no intervention or involvement from the government in the economy. Think about what kinds of things we might not have or how businesses might operate without government involvement or regulations. Be creative!