Government intervention is sometimes used to reduce the external costs of production.
Externalities will not be corrected purely by the market; some intervention of government is necessary to correct them.

Question

Quizplus · Accepted Answer

Externalities, such as pollution or noise pollution, are costs or benefits associated with production or consumption that are not reflected in the market price. In such cases, the market mechanism fails to distribute resources efficiently and, therefore, government intervention may be needed to correct them.

Government Intervention Is Sometimes Used to Reduce the External Costs