The basis of the argument favoring government intervention to correct informational and rationality problems is that:
A) if information is not perfect or if one trader is not rational, a trade can result in one party benefiting and the other losing.
B) entry into certain markets may be restricted so that excess profits cannot be eliminated by the forces of competition.
C) people cannot possibly know how well off they will be as a result of a trade until after the trade has occurred.
D) if individuals are free to produce whatever goods they want, when excess profit is being made, more people will enter into the production of that good and consumers will benefit as the price is pushed down.

Question

Quizplus · Accepted Answer

Government intervention is often justified when there are informational asymmetries or irrational behaviors in the market, as these can lead to one party benefiting at the expense of another, necessitating regulation to ensure fairness and efficiency.

The Basis of the Argument Favoring Government Intervention to Correct