free market and government intervention comparison in the same graph for any market and explain how...

free market and government intervention comparison in the same graph for any market and explain how government intervention for that problem correct the free market problems

Expert Solution

Ans) Negative externality is when the bystander bears the cost of any activity. Eg- pollution.

Here, social cost is more than private cost. The difference between social cost and private cost is known as external cost. When this external cost is ignored, goods are overproduced in the market.

To internalise this externality, government imposes tax equal to external cost. This reduces the supply and brings the market quantity equal to socially optimal quantity.

The above graph shows negative externality, where Qmarket >Qefficient because there exists external cost.

Now, to internalise this externality, government imposes tax equal to external cost. And supply reduces. Also, Qmarket reduces and becomes equal to Qefficient.

Rahul Sunny answered 2 years ago

ree market and government intervention comparison in the same graph for any market and explain how...

ree market and government intervention comparison in the same graph for any market and explain how government intervention for that problem correct the free market problems. this is when the government sets the price at $0. What are some of the benefits of having governemnt intervention in organ market.

State and explain three reasons for potential government intervention in cases of market failure government intervention...

State and explain three reasons for potential government intervention in cases of market failure government intervention – provide an example for each of the three reasons you identify

Explain why government intervention is important to stabilize the market?

Explain why government intervention is important to stabilize the market? Due to the Covid-19 pandemic, the government of Malaysia has introduced several initiatives since April 2020 and Malaysia Budget 2021. Discuss how these initiatives give impacted you.

Benefits and Costs of government intervention in free trade.

1. Neoclassical economists’ champion unfettered markets (free from government intervention). What explains these strong free market...

1. Neoclassical economists’ champion unfettered markets (free from government intervention). What explains these strong free market convictions, and why do critics feel they are ill-founded? 2. Why is the practice of environmental valuation being criticized for potentially undervaluing nature? Is it better to have, albeit imperfect, environmental values as opposed to having no environmental values at all? 3.What is meant by discounting? By way of example explain why critics of discounting regard the practice to run counter to the principle...

a. Explain with a graph the effect of a government budget deficit in market for foreign-currency...

a. Explain with a graph the effect of a government budget deficit in market for foreign-currency exchange! b. Explain with a graph the effects when government imposes import quota on imported goods in market for market for foreign currency exchange! c. Explain with a graph the effect of capital flight in a country!

The existence of a market failure often invites for government intervention in a particular market. It...

The existence of a market failure often invites for government intervention in a particular market. It is generally recommended that governments should play a facilitating role rather than a direct role in markets. Regulatory interventions should be limited. Appropriate interventions should have three general aims. To improve market infrastructure, Interventions infrastructure would target, Roads, Rail, market-facilities, water points and Health-control infrastructures. To improve information is important for facilitating effective marketing. To improve institutional infrastructure is the most important government role...

explain any five causes of government (non-market) failure

In the Austrian View, in a market economy without government intervention, if there is an unusually...

In the Austrian View, in a market economy without government intervention, if there is an unusually large number of unemployed workers looking for a job without success Select one: a. The market wage rate will increase, giving an incentive to many of the workers to accept a new job, and as a result, the labor market will clear rather quickly. b. The situation will last for a long time, because of the downward stickiness of the wage rate, unless the...

What are some of the economic arguments for and against government intervention in the market for...

What are some of the economic arguments for and against government intervention in the market for student loans? Do you believe that class size reductions will help student performance?

Question