.Explain why government regulation is needed, citing themajor reasons for government involvement in a market economy. 2.Justify therationale for the intervention of government in the market process...

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Solution
1.
The speed and rhythm in which an economy runs depends on the control and management power
of the economy. The type of regulations which the economy is subject to decides the outcome of
the governance of the economy. The type of growth of an economy is subject to the controlling
authority of a particular economy. The control are generally of three types, firstly the ones which
are controlled entirely by the government known as socialistic economy, second is those
economies that are fully private-owned and thirdly the mixed economies. In each type of
economy especially in the free markets government intervention is needed in order to control
certain important matters. Some of the important reasons for intervention are to control the prices
as the government might choose a price that is different from market and the prices should not go
below that. This ceiling of price will help to create a regulation that will make illegal the higher
charging of prices, especially in the case of necessities items this should be practiced.
2.
The intervention of the government is also considered a blockage in the development process in
some of the countries, especially countries like U.S and other developed nations. They seem to
avoid the control of the government in their economy. In the free markets like of U.S the scarce
resources are allocated on the basis of price mechanism, due to which the producers earn more
when the economy has a higher demand of products. But the intervention of the government...