What do you think?

1. The government should increase taxes to expand programs for the elderly.

2. The government should ease up on regulations protecting the environment.

3. The government should break up existing monopolies.

Do you strongly agree, somewhat agree, somewhat disagree, or strongly disagree with each statement?

1) Protecting Property Rights Encourages people to…

Take care of their propertyMake the most productive use of their

property

Develop their property in ways that benefit others

Article 1 of the U.S. Constitution

Monitor mergers

Regulate monopolies

Prohibit price-fixing, bid-rigging, and market division

2) Maintaining Competition

3) Protecting Consumers, Savers, & Investors

Food & Drug Administration

National Highway Traffic Safety Administration

Consumer Product Safety Commission

Consumers Protected Through…

Federal Deposit Insurance Corporation

Security & Exchange Commission

Savers & Investors Protected Through…

4) Protecting Workers

The Department of Labor protects workers’ economic rights.

The Occupational Safety and Health Administration protects workers’ physical well being.

Limit negative externalities

Support positive externalities

5) Addressing ExternalitiesExternality: A side effect of production or consumption that has consequences for people other than the producer or consumer.

Most goods and services produced in market economies are private. The consumers who purchase these goods consume these goods.Ex: Hamburger, shoes

Public goods are used collectively and no one can be excluded from using them.Ex: National defense, public parks

6) Providing Public Goods

Nonexcludable:

NONRIVAL In Consumption:

Once a public good is produced, it is difficult or impossible to exclude others from consuming the good, even if they

didn’t pay for it.

When one person consumes a public good, it does not prevent others

from also consuming the good.

Public good have 2 characteristics:

Free-Rider Problem: THERE IS NO WAY TO MAKE PEOPLE

WHO BENEFIT FROM PUBLIC GOODS PAY FOR THEM!

Because of this, private businesses do not have incentives to produce enough public goods.

Therefore, the government often provides them, through tax dollars, if people want them.

Fight unemployment

Encourage price stability (reduce inflation)

Promote economic growth

7) Promoting Economic Stability

Provide an economic safety net (to some degree)

Tax those with larger incomes and help those in need

8) Redistributing Income

Roles of Government in a Market Economy

Sample Placard:

What are three interesting details in this cartoon?What is happening in this restaurant? Why?What role of government does this cartoon represent?What might the cartoonist be saying about how well the government is carrying out its role in this case?

Complete the row for the sample placard on Handout 11.

Circulate around the room to analyze the placards.

At each placard, complete the appropriate row on Handout 11.

Trans fats are fats in food that contribute to high cholesterol. Some local governments have banned, or attempted to ban, trans fats in restaurant foods.