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Topic: Some economists argue that the government intervention makes the economic outcome even worse. Some argue...

Topic: Some economists argue that the government intervention makes the economic outcome even worse. Some argue that there are important economic roles of the government. What is your opinion? Does the government do good or bad IN TERMS OF ECONOMICS AND MARKETS?

Briefly discuss.

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Answer #1

IN my opinion government in the market is necessary where the market is generating a dead weight loss. that is the consumer and producer surplus market are not maximum. the government there can play a role to increase the maximum benefit and ensure that the market is benefiting all. For example, a market where the social cost of production is more than the private cost. In that situation the government can come in and impose a tax to correct the negative externality.

If the market is working at an equilibrium then the government intervention is not needed as it will generate negative externality.

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