Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It always improves efficiency
B
It can either improve or reduce efficiency depending on the situation
C
It has no effect on efficiency
D
It always reduces efficiency
Understanding the Answer
Let's break down why this is correct
Answer
Government intervention can affect market efficiency in several ways. When the government steps in, it may introduce rules, taxes, or subsidies that can change how businesses operate and how prices are set. For example, if the government imposes a tax on sugary drinks, the price of those drinks might go up, which could lead to fewer people buying them. While this could help reduce health problems, it might also mean that some people who enjoyed those drinks can no longer afford them, showing a trade-off between health benefits and individual choice. Overall, while intervention can help achieve certain goals, it can also disrupt the natural balance of supply and demand, sometimes leading to inefficiencies in the market.
Detailed Explanation
Government actions can change how well markets work. Other options are incorrect because Some people think that government always makes things better; It's a common belief that government has no impact.
Key Concepts
Government intervention
Topic
Government Intervention and Market Efficiency
Difficulty
easy level question
Cognitive Level
understand
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