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JAMB Economics 1995 Question 5

Question 5

Economic Systems

The active intervention of the central authorities in the management of a country's economy rests upon the

  1. A.failure of the market forces to produce satisfactory results
  2. B.superiority of the centrally planned economy over the private enterprise economy
  3. C.result-oriented nature of the private enterprise economy
  4. D.cost-minimization strategy of a mixed economy.
Show the answer and explanation

Answer: A (failure of the market forces to produce satisfactory results)

Explanation

Government steps in when the price mechanism fails, for example by under-providing public goods, creating monopolies or causing unfair income distribution.