government intervention

Question 1

why do governments intervene?

Answer 1

governments step in when there has been market failure that could be harmful to the population

Question 2

market failure

Answer 2

is when there are significant negative externalities and internalities in the economic markets

Question 3

roles of the government in the economy

Answer 3

to employ people, to provide welfare, to provide public goods, to collect taxes and to provide subsidies

Question 4

governments can intervene by…

Answer 4

distribution, making products undesirable, education, taxes to increase prices and regulation

Question 5

externalities

Answer 5

the impacts an activity has on people who are not involved in the activity

Question 6

internalities

Answer 6

the impacts an activity has on people directly involved in the activity

Question 7

what would happen if the government didnt intervene?

Answer 7

the population would have more preventable diseases and many would lack healthcare and education

Question 8

what are four aims of government intervention?

Answer 8

to stabilise prices, provide maximum prices, provide minimum prices and to change behaviour

Question 9

how can the government address market failure?

Answer 9

regulation, taxation and education