Question

When the government intervenes in the economy to promote efficiency, it means that the government is trying to:
a. change the way in which the economic pie is divided.
b. increase the size of the economic pie.
c. create a more unequal distribution of income.
d. create a more fair distribution of income.

Answer 1

Answer:

d. create a more fair distribution of income

Explanation:

The market forces sometimes do not allocate resources efficiently, therefore, the government sometimes intervenes in order to promote efficiency and create a more fair distribution of income.

For example, if the price for which market forces allocate for a good is too low, the government can intervene by setting a price floor.

Also, if the price of a good is too high, government can enact a price ceiling.

This ensures that the income of both producers and consumers are more fairly distributed.

Also, if a monopoly is setting the price of its goods too high, the government can regulate the activities of the monopoly to create a more fair distribution of income.

I hope my answer helps you.