Government Intervention in markets - Regulation and Information Provision

Question 1

In what forms might the government provide information? (3)

Answer 1

Advertising
Education
Nutritional labelling

Question 2

Explain the benefit of information provision

Answer 2

Understanding the true costs or benefits of a good for consumers - reduces information asymmetry

Question 3

Explain 2 disadvantages of information provision

Answer 3

Assuming the government has the perfect information

Opportunity cost of government spending

Question 4

Explain benefit of regulation

Answer 4

Increases cost of production so supply falls - brings the market closer to social optimum
NE forced to be considered by firms