Government intervention and provision


Question 1:

What do you understand by the term ‘own’ price elasticity of demand? What factors are likely to influence the size of this elasticity?

Question 2:

A publicly owned bus line is running at a loss. It is suggested that the loss can be diminished by changing the price of the bus rides. Describe and discuss why whether the demand for bus rides is elastic or inelastic might affect whether the appropriate change in price is a price raise or a price decrease.

Question 3:

The very existence of market failure suggests government intervention and provision. Discuss and illustrate.

Question 4:

‘There is a trade-off between unemployment and inflation.’  Do you agree with this statement? Justify your instance using suitable diagrams.

Question 5:

Mauritius is actually facing a problem of high unemployment. What measures can be taken to remedy the situation?

Question 6:

What do you understand by the phrase ‘economic efficiency’?

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Macroeconomics: Government intervention and provision
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