Examlex
The three major assumptions underlying the economist's theory of choice are (1) decisions can be made costlessly, (2) our preferences are given and not shaped by society, and (3) that individuals maximize utility. Explain why each of those assumptions may not reflect reality. Why may the assumption of "bounded rationality" be more realistic?
Government Failure
The occurrence when government actions lead to outcomes that are inefficient or not beneficial to society, contrary to its intended outcomes.
Market Failure
A situation in which the allocation of goods and services by a free market is not efficient, often leading to a welfare loss.
Government Failure
A situation where government intervention in the economy creates inefficiency and leads to a misallocation of resources.
Federal Money
Funds provided by the federal government, often to support state or local projects, policies, or to provide social services.
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