When there is market failure

Question

Quizplus · Accepted Answer

Government intervention is only beneficial when the marginal benefit of intervention exceeds the marginal cost. It is important to consider the effectiveness and efficiency of government intervention before implementing it. A laissez-faire approach may not address the market failure, but government intervention should be carefully evaluated before implementation. Natural monopolies may require more government intervention than other types of market failures, but this does not apply to all cases of market failure.

When There Is Market Failure