The Basis of the Argument Favoring Government Intervention to Correct

question 31

Multiple Choice

The basis of the argument favoring government intervention to correct informational and rationality problems is that:

• A) if information is not perfect or if one trader is not rational, a trade can result in one party benefiting and the other losing.
• B) entry into certain markets may be restricted so that excess profits cannot be eliminated by the forces of competition.
• C) people cannot possibly know how well off they will be as a result of a trade until after the trade has occurred.
• D) if individuals are free to produce whatever goods they want, when excess profit is being made, more people will enter into the production of that good and consumers will benefit as the price is pushed down.