question archive Select one of the four reasons Baye and Prince list for appropriate government intervention in the marketplace

Select one of the four reasons Baye and Prince list for appropriate government intervention in the marketplace

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Select one of the four reasons Baye and Prince list for appropriate government intervention in the marketplace.

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The most commonly accepted reason that is cited by Baye and Prince is government intervention to overcome market failures.

  • For instance, during a recession, the government can provide subsidies to an important supplier of a good or service that would have otherwise gone bankrupt and result in the creation of a monopoly from its main competitor. In this case, the government's short-term intervention helps maintain a degree of competition in the market place.