Chapter 16.2, Problem 4R

To determine

To ascertain the two arguments that supports government intervention and two arguments opposing intervention in the economy.

Explanation of Solution

Intervention by the Government is required to ensure full and efficient use of natural capital for the country's economic growth. Second is that some goods cost of production are too high like infrastructure, such type of investment by government can help a lot in the economy.

Governments can generate,more bureaucracy and inadequate in efficiency when investing on merit goods and public goods. State-owned companies tend to lack any motivation for profit, and thus continue to run inefficiently second arguments against government intervention leads to limit to personal freedom.

Economics Concept Introduction

Introduction: The government is attempting to battle market inequality through legislation, taxes, and subsidies. Governments can also interfere to encourage general economic justice in the markets. Some of the most important and well known motives for government interference is the maximization of social welfare.