government intervention in markets 1.4.1

Question 1

State provision

Answer 1

Direct provision of goods or services free at the point of consumption

Question 2

Information provision

Answer 2

To correct market failure caused by information gaps the Government may provide information. This could be through advertising (social media, leaflets, TV) or education

Question 3

Regulations

Answer 3

Regulations are rules (laws) in a market to influence behaviour of consumers and/or producers.

To correct market failure the government may introduce laws which prohibit certain behaviours and actions of consumers and/or businesses.

There will often be fines and/or prison sentences for breaching these laws.