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Applied Economics in Business

Although most people agree that the governmentâ??s role in the free market economy should be limited, the degree of appropriate government involvement is contested. Under what circumstances should the government bailout a failing business? Explain and cite a specific example to illustrate your reasoning.

Some people might argue that the reason the government has to manage cost and benefit externalities is that people are basically selfish. Explain the reasoning of that statement. Do you agree or disagree? Explain why.

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There is a discussion over the role of the government in a free economy. The government should not unduly put intense control over the organization. It may cause undue hardships in functioning of a business. However, there are circumstances that necessitate their interference in the working of an organization. The government should provide financial assistance for the survival of the organization.//

A free market economy is an economy, in which the government does not control the market. The government has no role in the regulation and legislation of economy. The role of the government is neither restrictive nor in promoting the economic activities. Every organization is free to run its business in terms of products, import, export, price, etc. There are circumstances in which, the government needs to control the economic activities, so the major damage to country's economy can be eliminated. Following are few of the situations, where the government needs to bailout failing business:

In case of inflation, some industries are subject to get affected by the inflation resulting into lower production. In this case, the government should bailout these industries for survival so that they can contribute to the ...

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The response addresses the queries posted in 733 words with references.