Question

ways in which the government intervenes in markets to prevent failure. Do you believe it is the government’s role to intervene? Is intervention consistent with the Constitution? If you agree, would you place a limit on the level of intervention? If you do not agree, discuss why.

• Your post should have a minimum of one hundred and fifty (150) words.

>>>> PLEASE ANSWER ORIGINAL < I HAVE BEEN RECEIVING THE SAME ANSWER AS MY CLASSMATES. THANK YOU

Answer 1

Government intervenes in market to raise the social benefits and try to reduce the private benefits attached with individuals.

Externality: It is an economic situation when some individuals in the society produce goods which reduces the social optimum quantity in the market and produce negative externality. It could be in the form of pollution from goods produced, water pollution etc. Government tries to reduce negative externality by taking into the account the social benefits in the society.

Monopoly: Government intervenes in market when one firm in the industry tries to gain monopoly power which could raise the prices of goods for consumers in long run and reduces overall benefit. They try to run perfectly competitive market in which there are many buyers and sellers in the market.

Public Goods: Government provides public goods to reduce free rider problem where some of the individuals pay to government to get public goods while others do not.

I believe that these are the government roles to intervene in the market as no private individual would think of raising socially optimum quantity, they can only think of raising private benefits. Constitution could play a role in government intervention in market as there could be some laws passed in countries to protect to raise welfare which are dependent on each nation economic structure.

Government intervention should be limited in the market as it does not extent to fixing prices or fixing desirable quantity in the market. It should be limited to protect social welfare. Goods prices and quantities should be dependent upon the producer and consumer interaction or equilibrium.