Answer to Question #154360 in Microeconomics for Abdul

Question

Evaluate whether government intervention is able to correct market failure in education. (20 marks)

Answer 1

The purpose of the government intervention in market is to ensure that there is no market failures, improve performance of the economy and ensure there is equatable distribution of resources. Competition,demand and supply forces in the market allows the market to set prices for their commodities though in some cases they fail requiring the government to intervene. The government is unable to correct the market failures in education simply because of vested interest. Most individuals want specific intervention that favour their personal interest. In addition the intervention effectiveness cannot be forecast because people are always changing their way of living and behavior. The intervention consequences also don't work in the inteded way .The market forces also have a way of finding solution to it's problems thereby rendering government effort not useful.There is need of combination of policies to ensure that the problem is solved.