Question

The government often intervenes in business, both domestically and abroad. What are some justifications of government intervention? Explain in detail and please make sure define some key concepts and also make sure to at least touch on public goods, monopoly power, externalities, etc..

Answer 1

Ans

Govt often intervenes to control market concentration and monopoly power. If it is not curtailed it will led to exploitation of people and unfair competition which ultimately harms interests of society

2 Govt needs to provide public goods. They are not provided by market because they are non rival and non excludable. Private firms can't charge thus for their consumption or stop from consuming them. These goods like roads, bridges are extremely important for growth and development

3 often private octions result in externalities. They are positive or negative. Positive externalities occurs when action of one individual or group Leds to benefits for third parts. Negative externalities impose costs on third parties. Market often provides too much of goods with negative externalities and under provides goods with positive externalities.

4 Govt needs to protect poor people whom the market excludes. Economic and social just Leds to empowerment of society

5 Govt also needs to provide merit goods because market doesn't supply them in adequate quantity and they are desirable.