Asked by Daniel Mordehai on May 08, 2024
Verified
Government can be used to solve externality problems that are too costly for private parties to solve.
Government Intervention
Actions by a government to influence or directly manage an economy or specific sectors, aiming to correct market failures, stimulate economic growth, or achieve social objectives.
Externality Problems
Situations in economics where the actions of individuals or businesses have effects, either positive or negative, on unrelated third parties that are not reflected in the cost or benefit of the actions.
- Understand the importance of governmental intervention for mitigating externalities and improving social welfare.
Verified Answer
SS
Serene SalemMay 11, 2024
Final Answer :
True
Explanation :
Governments can intervene in markets to correct externalities, such as pollution, through regulations, taxes, or subsidies when the cost for private parties to negotiate solutions is too high or impractical.
Learning Objectives
- Understand the importance of governmental intervention for mitigating externalities and improving social welfare.