Intervention Tools

Question 1

What is market modification?

Answer 1

The government will intervene to prevent market failure and improve economic efficiency

Question 2

What is legislation?

Answer 2

Imposing a set of government rules and laws on a market, people, business

Question 3

What is taxation?

Answer 3

Imposing taxes on a market eg. smoking
Decreases supply then increases price

Question 4

Ensuring fair competition:

Answer 4

Prohibits certain actions that might restrict competition, like tying agreements, predatory pricing, and mergers that could lessen competition.

Question 5

Competition policy:

Answer 5

Applying rules to make sure businesses and companies compete fairly with each other.

Question 6

Privatisation:

Answer 6

Privatization describes how a piece of property or business goes from being owned by the government to privately owned. It generally helps governments save money and increase efficiency, where private companies can move goods quicker and more efficiently.

Question 7

Interstate cooperation:

Answer 7

The interaction of States within the framework of coordinating their policies in accordance with the goal that unites them.

Question 8

Price surveillance:

Answer 8

Certain price and supply restrictions are imposed on a ‘declared’ body’s supply of the specified goods or services.

Question 9

Consumer protection:

Answer 9

The ACL protects small businesses and consumers from unfair terms in standard form contracts.

Question 10

Competitive conduct rules:

Answer 10

The Competition and Consumer Act 2010 bans business behaviours that damage competition. It is illegal for businesses to collude in a cartel or to impose minimum resale prices.

Question 11

Dealing with externalities:

Answer 11

Taxes, subsidies

Question 12

Supervising and regulating labour markets:

Answer 12

Regulating

Question 13

Supervising and regulating financial markets:

Answer 13

Regulating

Question 14

Supervising and regulating overseas markets:

Answer 14

Regulating

Question 15

What is direct taxes?

Answer 15

Direct to the people
Eg. income tax

Question 16

What is indirect taxes?

Answer 16

Passed on by other people, businsesses
Eg. GST Tax

Question 17

What are price ceilings?

Answer 17

Prevents people from rising above a certain level. The price cannot go above the equilibrium. Demand will exceed supply.
Eg. Rental prices

Question 18

What are price floors?

Answer 18

Lowest level of price a commodity can be sold for. The price cannot go below a certain point, and is above the equilibrium.
Eg. Agriculture, minimum wage

Question 19

What is pigouvian tax and subsidy

Answer 19

Tax or subsidy on a market with negative or positive externalities

Question 20

Why do Governments intervene?

Answer 20

Market intervention is needed because of market inefficiencies and failures. With the purpose of increasing welfare or pursuing certain economic and social goals, a government designs and enforces regulations, legislation or taxes that aim to obtain results that could not be obtained under a market that is entirely free. The Government intervenes to improve economic growth, correct market failure and improve distribution of income and growth.