Government intervention can be productive and efficiency enhancing:
A) whenever it regulates a market.
B) in markets for public goods and common resources.
C) because the government always acts with altruistic motives.
D) except in markets for public goods.

Question

Quizplus · Accepted Answer

Government intervention can improve the allocation of public goods (such as national defense) and common resources (such as clean air). This is because public goods are non-excludable and non-rival, creating a free-rider problem, while common resources can be overused or depleted. Government intervention, such as regulation or taxation, can address these market failures and promote efficiency. However, this does not mean that government always acts with altruistic motives, and government intervention may not be productive or efficient in all cases, such as in markets for private goods where prices serve as efficient allocators of resources.

Government Intervention Can Be Productive and Efficiency Enhancing