Government Action
A. Describe market failures, and explain why market failures lead to government intervention.
B. Describe transfer payments, and explain how this form of government action is supposed to benefit society.
C. How does government action correct imperfect information? Why is this necessary in a free-market system?
D. What is the government doing when it provides a public good such as national defense?
E. Why does the government impose fines on firms that create pollution as a byproduct of their production?