133k views
1 vote
Why might government want to intervene in the market? Give three examples and explain the rationale for each.

User Canpoint
by
8.3k points

1 Answer

4 votes

Answer:

Government should intervene in markets of services related to human capital formation i.e Education & Health

Step-by-step explanation:

Human Capital Formation is the development of skills & abilities in the human resource, making them more productive - through components like Education & Health

Government should intervene in these markets because:

  • These sectors (education, health) have long term & irreversible impacts on human resource i.e public
  • Their sellers have perfect information, but buyers have imperfect information about the quality of services
  • There is a risk of firms acquiring monopoly powers & exploiting the consumers
  • These are important to people's well being, but are unaffordable by many poor people

So: to prevent people from - long term adverse impacts, wrong information, monopoly exploitation & to make available to poor people. Govt intervention is necessary is certain markets.

User Frederik Prijck
by
8.6k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.