• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Government intervention in The Market System

Extracts from this document...


Government involvement in the economics of a country destroys the concept of a free-market economy. If the goods and services produced are subject to the forces of the market only, it is likely, under most circumstances, that both the producer and the consumer will reap the benefits. The market mechanism is such that the price it eventually settles on is reasonable for both the consumer and the producer. If the government is not involved in the market for at least some consumer products, then the hazards of a free-market economy would come into play. In the case of goods that are inelastic in nature; that is, the goods which are a necessity and for which there is no substitute, it is likely that the producers would exploit the consumers by raising prices, in order to obtain maximum profit. ...read more.


Or as in the extract above, they may pass laws, banning exports of the product, and relaxing import duties. One advantage of government involvement in the market, is that they impose duties on foreign items thereby protecting local industries. In the production of sugar for example, developed countries may possess state-of-the-art machines to convert the sugar-cane into sugar in the most cost-effective manner, and may thus be able to sell sugar in the world market at lower prices while retaining the same profit. In such cases, the government imposes taxes on such imported goods, so that the local producers can still cmpete with them. Another very important function of the government is that it ensures that the local population is not at a loss in any possible way. ...read more.


In a free-market economy where profit motive reigns sovereign, the production of these goods will continue as long as there is demand. In such cases, too, government intervention is necessary; it may discourage the consumption of such products by imposing high taxes on it, for example. Thus in conclusion, it may be said that government intervention is a blessing for the consumers and producers alike. Not only does this intervention ensure the direct well being of the masses, it also ensures other advantages- social benefits- by ensuring that the production of not just sugar and food products, but all goods, does not harm society in any way- environmentally, socially, through noise pollution, etc. On a cost-benefit analysis, the costs of government involvement are minimal compared to its advantages. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Chinese car market overview. Citroen case study

    Different kinds of cars then entered the Chinese market. Considering the "car industry association" data, in 1985, China only had 3.2 million cars on its market. At that time, on one hand, living means and salaries were still very low, and people did not have enough money to be able

  2. Retailing In India - A Government Policy Perspective

    Restrictions on foreign direct investment (FDI) FDI has been a key contributor to the rapid evolution of retail in other developing economies such as Thailand, Poland and China. In Thailand, seven of the top 10 retailers enjoy foreign equity and the list includes names such as Makro, Carrefour and 7-Eleven.

  1. This report will establish the opportunities and threats presented to Sony by the EU ...

    lot on what they can and cannot say to shops concerning the publicizing of Sony's goods. Impact of Social Policy on Sony The social policy is attempted to protect the rights of individuals and EU nations through directives. This policy mainly concerns the social environment of all businesses in the

  2. Elements of Art. 81

    The phrase is to be read disjunctively rather than cumulatively (STM). Societe Miniere: * First the very object of the agreement has to be considered in the light of the economic context in which it is to be applied. * Where an analysis of the said clauses does not reveal

  1. Environmental Analysis Of Landis Lund.

    Landis Lund employees objectives are fulfilled across the workforce, for those that are here just to get paid, providing they complete what is asked of them, they are OK. If you want to better yourself and the company, training is available where appropriate (workers in the machine shop do not

  2. The Market Mechanism - Operation and characteristics of the Price System.

    This indicates to firms that more should be produced; at the same time it provides and incentive for more factors of production to move into that line of production. Firms making the good will be earning high profits. They will wish to expand output.

  1. The Government Policy/Authority On Supervising the Market.

    They are all the potential factors in the current market, which could result the market failure. With these worries, government formed some investigating organizations, such as MMC (the Monopolies and Mergers Commission), and issued some competition laws, in order to protect the interests of consumers and small businesses and also

  2. Introduction to the TV market

    Figure B Compared with figure A, there were two more competitors in the market in 2000, satellite/ cable, which gained a 16.6% increase in market share and CH 5 with a 5.7 % gain in market share. Up against the new competition from satellite/ cable, the losers were BBC 1

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work