explain how the government intervenes in imperfect markets and the reasons for such regulation?
358510
Theoretically, government regulation of imperfect markets is in order to cause the market to reach the efficient output and price of a particular good that would not otherwise be reached, because of some adverse conditions.\n\nThere are several classic examples, and they illustrate well the variety of ways the government can intervene in imperfect markets. In education, for instance, people have little incentive to go to school for as long as is necessary, because the benefits are so delayed, so the government subsidizes education, giving grants, low interest loans, giving money to institutions to create an artificial surplus of schools, etc.\n\nAnother example is roads. Companies have no incentive whatsoever to build public roads, because there is no way, other than on toll roads, to reap any benefit. Therefore, the government simply takes over the production of that particular good, toll roads aside.\n\nA related, though somewhat outdated example is lighthouses. A company would never make a lighthouse, because there is literally no way to get paid for running it, so the government must build and maintain lighthouses for the public good.\n\nGovernment allowed monopolies are not an example of this sort of imperfect market control. Utilities are not imperfect markets by any means. If there was complete competition in the electricity markey, the efficient output and price would be reached rather easily. Instead, that is an instance of maximizing the benefit of economies of scale.
577938
An economic system or economy consists of a set of rules, goals, and incentives that govern economic relations among people in a society and provide a way to answer the basic economic questions.\nEconomic systems may rely heavily on:\nTradition\nBrute Force\nFirst come -- First Serve\nCentral Authorities\nMarkets\n\nTypes of Economies\nTraditional:\nold or primitive ways to respond to the economizing problem\nPlanned or command:\nThe Central Authorities decide what to produce.\nMarket system or capitalism:\nMarket prices guide production decisions.\nMixed System:\nCertain segments of the economy are dominated by the Government.\nPanama is like the majority of the world nations.it applies mixed economy.
512455
The government has many forms of taxes. The higher prices increase government tax income. This is a cash cow for the government.
384280
when government subsudizes a certain sector, that reduces the cost of production of the good. that leads to increase in world supply and price eventually falls, assuming demand does not change.
985038
There is always a better way. Given the thousands of things that are regulated by governments, like how a road is laid, timing of stop lights, etc., we really couldn't live without any regulation. \n\nThen consider what happens when banks became "unregulated" by Reagan, we paid; when TV became less regulated, althought the owners of stations use OUR airwaves, more commercials; and now consider that Bush want less regulation of literally everything that involved money to his buddies, you pay!
198279
Goverment turning over the operation of operation to a private company. For example, the US president wants to turn over the social security admin to the private market.\nTry Wikipedia for a definition, too, maybe they have a better defination.\nGood luck with the project.
986724
A statute can give authority to a government agency or even a non-governmental entity (see the (UK) Lloyd's Act 1982) to pass regulations having the force of law.\n\nThe most obvious case concerns Internal Revenue Regulations.
96927
Price control should only be to prevent gouging.  When dealing with economics, its best to let the market find its equilibrium point.  But during a natural disaster the supply of food and gas become inelasic, because people want to servive the disaster, and are willing to pay $100 for a gallon of water.  The government interferes and controls prices to save the economy (if people spend all of their money surviving a natural disaster, they will have none to start over after their homes and jobs are gone.).
582792
Whenever Subsidy is allowed on any commodity or in a particular industry, the government levies more taxes. These taxes may be levied on general public or on any other section of commodities. The taxes are imposed in order to cover the cost for allowing subsidy. In India, subsidy is provided to industries setting up units in backward areas, and government levies more taxes such as Education Cess, which may not be utilized for the cause so depicted by the name but for meeting the costs.\nRegards\nTSK\nhttp://tsk911.hi5.com
463789
The government in macroeconomics can utlize a number of what are called monetary policies to contract or expand the money supply.  This affects deflation or inflation.  The most common one used is to change the over night lending interest rate to banks.  This is what people are talking about when they say the fed is raising interest rates.  Another thing the gov't can do is issue or buy back government bonds/bills.  This can also increase or decrease the money supply.  Finally the government can change the required reserve ratio for banks which also controls the size of the monetary supply.
450539
the government contolls all market; the wealth is evenly distibuted between all the people; taxes are very high (80%ish) but everything is very cheap or free (e.g. free school, medical treatment, the gov't gives you money to go on vacation).
594515
The best actions to take would be the removal of regulations, the privatization of property, and allowing the marketplace to allocate resources.\n\nWithout profits and losses there is no way to know where resources should be applied and where they should be withdrawn. And you can't have profits and losses if you don't have private property.
1186490
All markets have a tendency toward efficiency, but many people take EMH much too literally.  The fact that the market (if thoroughly free and unimpeded) moves toward efficiency doesn't mean that it is fully efficient at any one moment.  Also, markets can't become efficient without the decisions and actions of investors, arbitrageurs, and entrepreneurs of various sorts.\n\nEMH suggests perfect efficiency at all times, if we read it too precisely.  My argument is that the world is never that precise when people's decisions are involved.  Over time, if the world stopped, the market would reach efficiency, but with constant dynamic change, I doubt if the market ever has time to catch up completely.  \n\nAlso, in heavily regulated markets, or markets where access is limited, efficiency can't be fully achieved, because the artificial limits are impeding the market's ability to equilibrate.  I don't know India's restrictions, but clearly, structural limitations do impose restrictions on international capital flows, and therefore prevent full efficiency.\n\nSo, efficiency is not fully achieved.
1070776
The government can control the economy, providing stability and a sense of certainty that would lead to a rise in economic activity. The economy can then sustain a steady growth
91836
market related (quantity, price, etc), investment of companies (since they tend to expand the market), mergers and aquisitions, government regulation
1386
It mainly develops naturally. The flow of money is the building block of an economy, and people will keep money flowing fairly well on their own as long as there is a basic infrastructure, such as a set market place and day/time. The highly complex economy we have today is mainly the result of these natural developments. Governmental interference can only make a limited amount of difference.
1165913
laissez-faire, which is a government injunction against interference in free trade.