1.4.1 - Government Intervention In Markets

Question 1

What Are Some Reasons Why Government Intervention Is Necessary?
(5 Points)

Answer 1

~ Support firms.
~ Promote equity.
~ Collect government revenue.
~ Support poorer households.
~ Correct market failure.

Question 2

What Are The Types Of Government Failure In Markets?
(7 Points)

Answer 2

~ Indirect taxation (Ad valorem and specific).
~ Subsidies.
~ Maximum and minimum prices.
~ Trade pollution permits.
~ State provision of public goods.
~ Provision of information.
~ Regulation.

Question 3

What Are Examples Of Indirect Tax?
(2 Points)

Answer 3

~ Ad valorem.
~ Specific.