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Market Failure and Government Intervention

Figure 17-7  Regulation24

Federal Trade Commission Act of 191425

criminal penalties25

civil suits25

plaintiff25

defendant25

per se26

rule of reason26

SECTION 5.  GOVERNMENT FAILURE27

Economic Impact Analysis28

closure analysis28

cost effectiveness analysis29

objective-cost study29

regulatory impact analyses (RIAs)29

fiscal impact analysis29

              Figure 17-8.  Government Studies30

Figure 17-8.  Government Studies30

Figure 17-9  Private Studies32

A. Market Power32

patent33

Innovation34

cross license34

cross licensed35

B.  Externalities and Side Effects35

C.  Economic Distortions35

D.  Information36

E. Equity36

marginal rate of taxation36

F.  Lags and Dynamic Government Failure37

recognition lag37

response lag37

implementation lag37

impact lag37

Table 17-10 Grand Summary of Market Failure, Government Intervention, Government Failure38

SECTION 7.  THE MANAGER'S ROLE38

Managerial Economics provides tools to solve problems that decision makers face in business organizations.  However, familiarity with the tools of managerial economics also provides the experience to identify when problems exist and the means to solve them.  In this book, we will study not only how to solve problems, but how to formulate the problems to be solved.

SECTION 1.OBJECTIVES, CONSTRAINTS, AND CHOICES

Managerial economic techniques can be used when three basic elements of a problem have been identified.  The three elements include:

(1)Objectives.  "Goals", "targets", "desires", "ends", and "motives" are some of the alternative words that are frequently used to express objectives.  Economic problem solving requires objectives to be laid out clearly.  When more than one objective exists

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