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17 December, 20:04

Why might government want to intervene in the market? Give three examples and explain the rationale for each.

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  1. 17 December, 23:37
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    Government should intervene in markets of services related to human capital formation i. e Education & Health

    Explanation:

    Human Capital Formation is the development of skills & abilities in the human resource, making them more productive - through components like Education & Health

    Government should intervene in these markets because:

    These sectors (education, health) have long term & irreversible impacts on human resource i. e public Their sellers have perfect information, but buyers have imperfect information about the quality of services There is a risk of firms acquiring monopoly powers & exploiting the consumers These are important to people's well being, but are unaffordable by many poor people

    So: to prevent people from - long term adverse impacts, wrong information, monopoly exploitation & to make available to poor people. Govt intervention is necessary is certain markets.
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