Paper Topic:

should the government intervene in the market?

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Should Government Intervene In The Market

Market is where the forces of demand and supply meet . In case of free market , free competition is encouraged economic agents are assumed to have relevant information to make decisions , buyers and sellers are many and no economic agents has power to influence market price-determined through interaction of demand and supply , economic agents are also assumed to be rational and will seek to have more than less . In such a market , the individuals will seek to further their

own interests , and the collective decisions of all economic agents will determine the economic activities in the economy . Mostly , the market involves the interaction of the firms /business and households . The consumption function and production function of households and firms respectively meet in the market . Firms will focus on obtaining the highest profits possible . Firms will continually strive to improve technology , service and price in to benefit from a stream of short-lived streams of supernormal profits (Swain 2000 p1 . On the other hand , consumers will seek to maximize their utility given their income , taste and preferences , and market prices . The government role should only be aimed at providing an environment that will enhance this process

However , market conditions are not necessarily like stated above . It is likely to have a market with few or a single seller , few buyers or even a single buyer . Additionally , economic agents may not have the relevant information to enable them make informed decisions . Monopoly...

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