Homework

The Modified Market Economy

• Will allocate resources efficiently, but not necessarily fairly (equitably)
• This creates modified market economies (which have some level of government intervention)
  • For example, Australia
• The economic roles of government in such an economy can be categorised as
  • The provision of public goods and services
  • The redistribution of income
  • The regulation of business enterprises
  • Macroeconomic management

Provision of goods and services

• People pay for private goods out of their own pockets
• However, electricity, gas, water, etc. are provided by government for the following reasons:
  • They require large amounts of expensive infrastructure
  • To prevent monopolisation and exploitation
  • they are natural monopolies (can take advantage of monopolies of scale, centralisation)
• This has changed over time, through a process known as privatization