23022 Public Economics

Description

This subject applies and extends the knowledge and skills students have developed in Intermediate Microeconomics to an analysis of the economic rationale for collective choice and government intervention in the economy. It explores and evaluates the government's ability to identify and achieve more efficient and equitable outcomes. Students extend their knowledge of welfare economics and examine the motivation behind government intervention in the economy. They see why a market economy fails to achieve efficient solutions in the presence of public goods, externalities, natural monopoly and asymmetric information. The subject explains the mechanisms of collective choice, cost–benefit analysis and income redistribution and explores the theory of taxation. Students enhance their ability to distinguish between progressive and regressive taxes, between formal and effective incidence, and between efficient and equal taxes. They also examine how individuals react to income taxes and benefits by modifying their labour supply and consumption behaviour. Finally, the subject presents specific sectors where government intervention is traditionally active, such as health care and education, with emphasis on the Australian economy.