Answer to Question #189367 in Microeconomics for azis

Question

The fact that the Malaysian government has intervened in the face mask market indicates that it has no

confidence that the market is good enough to allocate the face mask in an efficient manner. Do think the Malaysian government’s intervention is necessary or redundant? Justify your answer.

Answer 1

I think the Malaysian government’s intervention in face masks market is necessary. In Malaysia, the face masks market is inefficient to allocate face masks. As a result, in some areas the market supply of face masks will be high and in some areas the market supply of face masks will be very low. This will create an imbalance in face masks market. Because the price of face masks in areas with high supply will be low and the price of face masks in areas with low supply will be high. As a result, consumers will face problems. In this situation if government intervene in the face masks market and help to allocate face masks efficiently then it is a good thing. So, I think here in this face masks market the government intervention is necessary.