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can policy market interventions cause consumer or
Government intervenes in the market when it feels that the prices of goods and services are either too high or too low and hence they are disrupting the total surplus in the economy. These interventions resulting in change in the consumer and producer surplus in the market.
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- What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?What are the possible reasons why the government may make a market intervention? What are the possible implications of such interventions? How might the wedge between consumers and firms lead to market distortions?. Explain why economists usually oppose price control
- Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market? a. To promote efficiency b. To protect an industry from foreign competition c. To enforce property rights d. To promote equalityWhen a market is competitive and functioning properly, economic theory predicts that the market equilibrium will be efficient. However, this may not always be the desired outcome. Market outcomes may be unequal or distorted by market failure. Offer an example of a market where you consider the real-world outcome to be unacceptable. Why is the market outcome unacceptable? How can government policy improve on the market equilibrium? Will this solution create a surplus or shortage in the market according to economic theory? Explain. What effect will this solution have on consumer surplus, producer surplus, social surplus, and deadweight loss? Explain.Describe how government intervention affects the supply and demand equilibrium. by using the two illustrations above.
- Explain the Consumer Surplus and Producer Surplus concept. Why this surplus concept is important in the market analysis? How price changes create inequilibrium in the market?Discuss real world examples of Consumer and Producer Surplus ?Markets fail, so there could not be a total reliance on the market forces. The government has to intervene, which gives rise to what i0s referred to as a --------------------- economy
- Question 16 Refer the to graph below to answer Questions 16-18 In the graph above, if the minimum price is set at P1, what area(s) represent the producer surplus after the implementation of this policy? Question 16 options: a) Areas B+C+E+F b) Areas B+E c) Areas E+F d) Area E e) Area B Question 17 In the graph above, if the minimum price is set at P1, what will limit the quantity of the good that is sold? Question 17 options: a) Demand b) Supply c) A government quota d) Consumer surplus e) Producer surplus Question 18 In the graph above, if the minimum price is set at P1, what area(s)…Which of the following is not a reason why negative consequences can result from efforts to control prices? Market equilibrium indicates the optimal or efficient amount of goods, services, labor, or financial capital. Controlling prices interferes with the forces of supply and demand. Prices of goods, services, labor, and financial capital link different markets together. Controlling one market can affect the nature of other markets. Manipulating price does not change the fundamental characteristics of supply and demand. Prices reflect the amount of profit that producers want to gain for providing goods, services, labor, or financial capital to the market.How will the imposition of the chosen government policy impact consumer surplus, producer surplus and total surplus in this scenario
