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Thread: Market System

  1. #1
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    Market System

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    In most economies, the government plays a role in the market system. Governments enforce the rules of the game, impose taxes, and may control prices through price ceilings or price supports. These actions necessarily may create shortages or surpluses. In most developed and interdependent economies, the necessity of the government’s playing some role in the economy is disputed.

The author of the passage would probably agree that


    A. economic surpluses are always good.
    B. market shortages are a necessary evil.
    C. higher prices strengthen the economy.
    D. price ceilings add to the shortages.
    E. surpluses are not usually created intentionally.

  2. #2
    Within my grasp! sandeep_chads's Avatar
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    1 out of 1 members found this post helpful. Good post? Yes | No
    govt plays role in mkt
    -> tax
    -> price ceiling
    Dev economies - govt role disputed

    The author should agree that Dev economies do not require taxation and price management.on looking at the choices I felt the answer wants to relate the well being of the developed nations with their attributes

    1) There is referrence of surpluses and shortages - not sure what refers to developed economies
    2) same as a
    3) the author talks about price ceiling and not higher prices
    4) There is no relation between celings and shortages
    5) The author states that the Govt. creates the surpluses and shortages therefore these do happen intentionally

    on the D day I may mark E but there is no reason for me to mark it
    Hey Harvard, I am right here!!
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  3. #3
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    i think its either D or E

    can anybody confirm the correct ans please

  4. #4
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    Good post? Yes | No
    answer is E. if u c the conclusion carefully u ll come to know.

    " the government’s playing some role in the economy is disputed "

  5. #5
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    I will go with E , as the intentional step will lead to this condition "These actions necessarily may create shortages or surpluses".

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