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What do you think the government’s role should be in a free enterprise economy? Why?

What do you think the government’s role should be in a free enterprise economy? Why?. Enforcer of Contracts. Provider of Nonexcludable Public Goods. Two Main Roles. Enforcer of Contracts. Contract: an agreement. Laws defining the rights and responsibilities of parties to a contract

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What do you think the government’s role should be in a free enterprise economy? Why?

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  1. What do you think the government’s role should be in a free enterprise economy?Why?

  2. Enforcer of Contracts Provider of Nonexcludable Public Goods Two Main Roles

  3. Enforcer of Contracts Contract: an agreement • Laws defining the rights and responsibilities of parties to a contract • Courts to rule on the case and the law. Experiences?

  4. Private Goods: One’s consumption of that good takes away from another person’s consumption Any consumable product…apples, computers, bicycles… Public Goods One’s consumption does not take away from another person’s consumption A lecture, a movie, a parade, football game 2 types Goods

  5. Excludable A person can be excluded (prevented) from using that good You need a ticket to get in; you have to pay tuition to listen to the lecture Nonexcludable A person cannot be excluded from using that good. National defense, lifeguards, some public works projects Public Goods

  6. Excludable public goods and private goods are supplied for profit. • Since people* cannot be prevented from using a nonexcludable public good, who will supply nonexcludable public goods????

  7. *people who consume a nonexcludable public good without paying Free riders

  8. GovernmentCommon Forms of Nonexcludable Public Goods • Public Works • Police • Armed Forces • Fire Protection How does government pay for these? TAXES

  9. Political Discussion • How much and what types of nonexcludable public goods? Health Care? War? New Schools? Fewer Taxes? Prisons? Higher Taxes? Bigger navy? Social Security? Parks? Save The Whales? More Cops on the Beat? Libraries?

  10. Next: • Read Chapter 2.6 pages 58-60 • Complete the hand-out provided.

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