Question 34
Economic SystemsGovernment intervention in an economy is often justified on the group that
- A.wants are unlimited while resources are scarce
- B.productivity is higher in the public than in the private sector
- C.free market may not work or produce desirable results
- D.opportunity cost of government expenditure is zero.
Show the answer and explanation
Answer: C (free market may not work or produce desirable results)
Explanation
Governments intervene when free markets fail, for example by not providing public goods, creating monopolies or leaving large inequalities.