Asked by
Erika Garris
on Nov 25, 2024
Verified
Based on our study of market failure and government failure, the main conclusion that one should arrive at is that
A) the market system is highly vulnerable to imperfections, and therefore the socialist system is a much better system to adopt.
B) the government has much imperfection and creates a lot of inefficiencies; therefore, it is best to adopt a pure market system.
C) it is best to always compare perfect markets against an idealized benevolent government that efficiently responds to the wants of society.
D) we must carefully compare the benefits of government intervention in our markets against the costs of such intervention.
Market Failure
A situation in which the allocation of goods and services by a free market is not efficient, leading to a potential welfare loss.
Government Failure
A situation where government intervention in the economy causes inefficiencies or leads to a misallocation of resources.
Government Intervention
Actions taken by a government to affect or control various aspects of the economy, such as regulations, subsidies, tariffs, and taxes to correct market failures and promote economic stability.
- Comprehend the implications of market failure and government intervention.
Verified Answer
AG
Learning Objectives
- Comprehend the implications of market failure and government intervention.