1. The Role of Government in the Economy

2. Role of Government: Providing Public Goods
Private Goods: must be purchased to be consumed; can’t be consumed by anyone else
Items we buy & replace
Ex: clothes; food; haircuts; auto care; insurance; etc.

3. Role of Government: Providing Public Goods
Private Goods: must be purchased to be consumed; can’t be consumed by anyone else
Items we buy & replace
Ex: clothes; food; haircuts; auto care; insurance; etc.

4. Public goods: multiple people can consume; doesn’t matter if you pay
Gov’t provides them: hard to charge for public goods
Ex: public parks; public libraries; museums; highways; street lighting

5. Maintaining Competition
Monopoly: sole provider of good/service
When there is no competition, monopoly charges any price it wants
Gov’t tries to encourage competition via anti-trust laws: laws to control monopoly power & promote competition
1890: Sherman Antitrust Act
1914: Clayton Act

6. Mergers Merger: combination of 2+ companies to form a single business
Depending on the companies, gov’t might step in to prevent it

7. Regulating Market Activities
1. Natural monopolies: cost of production lessened by having single firm produce product
Firm agrees to gov’t regulation in return for having market all to itself

8. 2. Advertising & Product Labels
Can’t lie about product
Can’t lie about contents (allergies)
FDA, FTC

9. 3. Product Safety Recall: company pulls product off market/ agrees to change it to make it safe

10. Role of government in poverty guidelines/ programs
Food stamps, SNAP (Supplemental Nutrition Assistance Program)
WIC (Women, Infants, and Children): help w/ nutrition, health care (kids up to 5)
Other programs like income assistance (elderly, blind/ disabled), Workfare (work for welfare benefits), progressive income tax, etc.