2. What do you think?
Do you strongly agree, somewhat agree, somewhat
disagree, or strongly disagree with each statement?
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.

3. 1) Protecting Property
Rights

Encourages people to…
Take care of their property
Make the most productive use of their
property
Develop their property in ways that benefit others
Article 1 of the U.S. Constitution

4. 2) Maintaining
Competition

Monitor
mergers

Regulate
monopolies

Prohibit pricefixing, bid-rigging,
and market
division

5. 3) Protecting Consumers,
Savers, & Investors
Consumers Protected
Through…



Food & Drug
Administration
National
Highway Traffic
Safety
Administration
Consumer
Product Safety
Commission
Savers & Investors
Protected Through…


Federal Deposit
Insurance
Corporation
Security &
Exchange
Commission

6. 4) Protecting Workers

The Department of
Labor protects
workers’
economic rights.

The Occupational
Safety and Health
Administration
protects workers’
physical well being.

7. 5) Addressing Externalities
Externality: A side effect of production or consumption that
has consequences for people other than the producer or
consumer.

Limit negative
externalities

Support
positive
externaliti

8. 6) Providing Public
Goods

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

9. Public good have 2 characteristics:
Nonexcludable
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.
NONRIVAL In
When one person consumes a public good,
Consumption:
it does not prevent others from also
consuming the good.

10. 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.

11. 7) Promoting Economic
Stability

Fight unemployment

Encourage price stability
(reduce inflation)

Promote economic
growth

12. 8) Redistributing
Income

Provide an economic
safety net (to some
degree)

Tax those with larger
incomes and help those in
need

13. Roles of Government in a Market Economy

14. Sample Placard:
What might happening does
the interesting details in this Why?
What rolethreecartoonist be saying about how well the
What areisof governmentsample restaurant? cartoon?
What
Complete the row for the in thisthis cartoon Handout 11.
placard on represent?
government is carrying out its role in this case?

15. Circulate around the room to analyze the placards.
At each placard, complete the appropriate row on Handout 11.

16. 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.