Inadequate information, conflicting objectives and administrative costs are possible sources of government failure
Governments can make economic problems worse for three key reasons. They may lack good data, pursue goals that clash with each other, or spend so much running a policy that it costs more than it saves.
Real World
The UK government's roll-out of Universal Credit was plagued by administrative costs and conflicting objectives — the system aimed to simplify benefits while also incentivising work, but IT failures and delays left thousands of claimants worse off than under the old system.
Exam Focus
When asked to 'explain' government failure, always link each cause to a specific misallocation of resources for full marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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