Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Governments can break up monopolies to enhance competition.
B
Government intervention is unnecessary if consumers can choose not to buy from monopolies.
C
Regulations can help ensure fair pricing and protect consumers from exploitation.
D
Governments should always allow free markets to self-correct without interference.
E
Providing public goods can address inefficiencies in the market.
Understanding the Answer
Let's break down why this is correct
Answer
The government plays an important role in fixing market failures, which happen when the free market doesn't allocate resources efficiently. One key way the government can help is by regulating industries to prevent monopolies, which can lead to higher prices and less choice for consumers. For example, if one company controls all the electricity in a town, it might charge too much because there’s no competition. Additionally, the government can provide public goods, like parks and roads, which the market may not supply enough of since they benefit everyone, not just those who pay for them. By stepping in, the government helps ensure that resources are used fairly and that everyone has access to essential services.
Detailed Explanation
All the statements misunderstand how government can help fix problems in the market. Other options are incorrect because This suggests that breaking up monopolies isn't needed; This implies that consumers can simply avoid monopolies.
Key Concepts
Market Failures
Government Intervention
Monopolies
Topic
Market Failures and Government Role
Difficulty
hard level question
Cognitive Level
understand
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