Question 6

Question 6: Provide any 4 justifications for government intervention in production and provision of public and private goods.

Economy happens to be one of the main assets of a country, with economy it determines whether which level of economy that the country is categorized into. Whether it is developing, developed or least developing country, if the economy is vulnerable it makes the country’s economy to be controlled by outsiders. As when this happens, the country’s resources cannot be used by their government and the market price will be controlled by the outsiders whom possessed the highest control in the economy. As we know, Malaysia practices mixed economy where mixed economy is defined as an economic system that features characteristics of both capitalism and socialism but also allows for governments to interfere in economic activities in order to achieve their aims (Investopedia, n.d). Government intervention is very important as the government will come out with policies that restricted some of the sectors to be dominant by other peoples. As in, if the industrial sector is not being controlled by the government, the government will lose their authority in controlling the industrial sector.

The first justification which is to control the price of goods and services in the economy, goods and services in the economy will determined the country’s gross domestic product (GDP), gross national product (GNP) and other factors that can affect the country’s national income. One of the government functions, which is to make sure that the people will receive the quality of goods and services without having to burden the citizen. Without the authority, the market price can increase and decrease without having any reason why the prices just went up. This is why the government introduced the ceiling price and the floor price. Ceiling price is when the government imposed the regulations that prevent prices from rising above a maximum level that can lead to the...