According to an economic principle, what is the effect of government intervention in the presence of a market failure?
A) Government action does not improve on the market outcome because sometimes public policies simply reward the politically powerful.
B) Government action does not improve on the market outcome because some leaders are not fully informed.
C) Government action can sometimes improve on the market outcome.
D) Government action will always improve on the market outcome.

Question

Quizplus · Accepted Answer

The economic principle of government intervention in the presence of a market failure suggests that government action can sometimes improve on the market outcome. This is because market failures occur when the market fails to allocate resources efficiently, and government intervention can correct these inefficiencies through policies such as regulation or taxation. However, it is important to note that government action may not always improve the market outcome and can sometimes lead to unintended consequences.

According to an Economic Principle, What Is the Effect of Government