3.6.2

Question 1

What’s the impact of government intervention on prices?

Answer 1

They’ll decrease in order to protect consumers and limit (price ceiling) the amount of profit they’ll be able to make.

Question 2

What’s the impact of government intervention on profit?

Answer 2

It’ll decrease as costs ma increase to retain quality and prices may decrease from price ceilings.

Question 3

What’s the impact of government intervention on efficiency?

Answer 3

It’ll incetivize firms to operate efficiently instead at x-inefficiency

Question 4

What’s the impact of government intervention on quality?

Answer 4

It’ll increase as monopolies may need to increase quality to due to accreditation and certification.

Question 5

What’s the impact of government intervention on choice?

Answer 5

It’ll increase due to increased competition.

Smaller firms doing join ventures to grow in the market so consumers have more of a choice.

Question 6

What’s regulatory capture?

Answer 6

Regulatory capture is a form of government failure where those bodies regulating industries become sympathetic to the businesses they are supposed to be regulating

Question 7

What’s asymmetric information?

Answer 7

When one party in a transaction is in possession of more information than the other