what is market outcomes ? How can government improve it ?
Answers
Answer:
Governments can sometimes improve market outcomes. Discuss this statement in detail giving examples of situations in microeconomics where Governments should intervene in the markets. Governments can sometimes improve market outcomes. There are two broad reasons why a government may choose to intervene - to promote efficiency and to promote equity. Thus a government may intervene when efficiency and equity are absent, ie. in the case of a market failure. A market failure is when a market on its own fails to produce an efficient allocation of resources. Markets ensure those who can pay for goods get them; there is no equitable distribution of economic well being; for example, income support, welfare housing, public goods etc. This essay will discuss price controls; taxes and subsidies; positive and negative externalities; common resources and public goods; income redistribution; imperfect information and imperfect market structures as examples of situations where governments should intervene in markets.
Market Outcome:
Market Outcome refers to the Contract's outcome. The "Market Outcome" is YES if the Payout Criterion includes the Expiration Value. If markets are efficient, there is no way to "beat" the market since all information is already taken into account in prices and there are no assets that are undervalued or overvalued.
Governments can occasionally improve market outcomes. Governments can implement subsidies, which raise prices and enhance the attraction of domestic goods by taxing the public and giving the money to an industry, or tariffs, which impose additional taxes on imported goods. Increased taxes, levies, and restrictions may cripple businesses or entire industries. To improve efficiency and advance equity are the two basic justifications for government intervention. Therefore, the government may take action if efficiency and equality are inadequate or if there is a market failure.
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