ECS 1601 ASSIGNMENT 2

2.1 An appropriate government intervention in the economy … [1] is to encourage a monopolistic market that satisfies the aggregate demand for goods and services by the public. [2] is to get involved in the economic sectors where the private sector is producing goods and services more efficiently. [3] involves measures to correct market failure and provision of public goods and services. [4] has to do with taking income from those with low incomes and providing income to those with higher incomes. Cognisance should be taken of the fact that markets do not always produce efficient outcomes. Markets fail and when they do, a case for government intervention arises. In other words, government intervention may be required in an attempt to correct market failure. 2.2 Which of the following statements is/are correct? a) The failure of markets to produce efficient outcomes, is called government failure. b) Government may fail to have efficient outcomes due to corruption. c) Government failure arises because bureaucrats put the interest of society first. [1] b and c [2] a and b [3] a and c [4] b Corruption is one of the main variables affecting the efficiency of government, it reduces resources that could be used to enhance efficiency. 2.3 Which one of the following statements on nationalisation and privatisation is correct? [1] Nationalisation is the transfer of ownership from the public sector to the private sector. [2] Privatisation is the transfer of ownership from private enterprise to government. [3] One of the