Explore BrainMass
Share

Market Efficiency and Government Intervention

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Has the time come for government to abolish rent controls and the minimum wage? What do you think? Do both rent controls and minimum wage laws achieve their intended purposes? Provide two examples. Are there any unintended consequences? Provide two examples.

© BrainMass Inc. brainmass.com October 25, 2018, 3:43 am ad1c9bdddf
https://brainmass.com/economics/unemployment/market-efficiency-and-government-intervention-351059

Solution Preview

Has the time come for government to abolish rent controls and the minimum wage? What do you think?
Yes, the time has come for government to abolish rent controls and minimum wages. Each of these distort the market for housing and the market for labor. In case of rent controls there are fewer apartments available for rent and in case of minimum wages there is large scale unemployment. Setting price floors above equilibrium level in case of wages leads to unemployment.
Do both rent controls ...

Solution Summary

Market Efficiency and Government Intervention is discussed very comprehensively in this explanation..

$2.19
See Also This Related BrainMass Solution

Explain why, in the microeconomics view of the world, the operation of the private market as a default, maximizes economic efficiency--hence, why government intervention on efficiency grounds has to be specifically justified by particular circumstances.

The answers should be 1 short paragraph for each subpart.

a) Explain why, in the microeconomics view of the world, the operation of the private market as a default, maximizes economic efficiency--hence, why government intervention on efficiency grounds has to be specifically justified by particular circumstances.

b) What are the 3 specific circumstances, where the operation of private markets does not maximize economic efficiency, hence, where government intervention is conceptually justfied on efficiency grounds?

c) Picking 2 of the 3 examples from part (b), draw diagrams which show how the market responds to the optimal government intervention designed to correct the efficiency problem, and explain, with appropriate lettering in the figures,, the net economic effects on all of the affected parties, and the net efficiency effect that results when the "market failure" is fixed through government intervention.

d) Explain the conservative critique of the accounting result obtained in part (C), and the more general critique of the philosophy that government intervention is justified to fix the efficiency probblem in such cases. Please see attached handout on "market failure" versus "government failure" for explanation of these 2 terms.

Thank you for your help! If you have questions about the deadline or credit value, please send me a note!

View Full Posting Details