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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Governments may intervene in a market economy in order to

a. protect property rights.

b. correct a market failure due to externalities.

c. achieve a more equal distribution of income.

d. All of the above.

To determine
The government intervention in the market.

Explanation

Option (d):

Governments may intervene in a market economy when the market experiences market failure, to protect the property right and also to achieve more equal distribution of income. Thus, the option ‘d’ is correct.

Option (a):

The property rights are the ability of an individual to own and exercise control over scarce resources. Here the interference of government is through implements of rules, regulation and maintains the institutions that are the keys to a market economy but the government intervention is not only for protecting the property right. It is a partially correct answer. Thus, the option ‘a’ is incorrect...

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