Exercise 3

Please read the lecture slides for week 2 carefully on the topic of government organisation.

A Argue why governments are organized in ministries and other particular organisations

mandated to produce particular outcomes, rather than all having the mandate towards the overall goal

of government.

B Mention two problems one gets because government is organized in functional units with

limited goals.

C Give three examples of how governments address the problems inherent to having

organized itself in distinct functional units.

Bonus Describe the problem above in terms of embodied cognition and market failures. Then

interpret the solutions you mentioned in C in terms of comparative advantages and returns to scale.