question archive The disadvantages of government intervention include a) Achieving desirable goals b) Lower taxation c) Incentive problems d) Reduced regulation
The disadvantages of government intervention include a) Achieving desirable goals b) Lower taxation c) Incentive problems d) Reduced regulation
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The disadvantages of government intervention include
a) Achieving desirable goals
b) Lower taxation
c) Incentive problems
d) Reduced regulation
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The correct answer is c) Incentive problems.
When the government intervenes in a market, it can change the market in such a way that the profits of the sellers are reduced (for example, a reduction in price due to government intervention). When this happens, sellers lose the incentive to produce more. Also, if a government intervenes in a market with the view of selling in the market, there will be a low incentive because government corporations do not operate with a profit motive and this leads to inefficiencies.
