Demand Production and Government Intervention I

In general, the U.S. economy is characterized by "free enterprise," in which market forces determine supply, demand, price, and other economic variables. However, the government also plays a role in the economy, particularly in the real of regulation and taxation, which varies from sector to sector. The extent of such government intervention depends on various factors, such as whether the public interest is adequately served by the workings of the free market. In medical care and housing, for example, the government tends to play a significant role because they are considered necessities in a modern industrial society, which should be available to all. On the other hand, small, entrepreneurial businesses tend to be left alone by government, where success or failure is to be determined largely by market forces. Thus, in reality, the U.S. is a "mixed economy" in which the market predominates, subject to overall rules and sporadic intervention by government. This paper will discuss government's role in three distinct areas of the economy: pollution control, medical care, and antitrust law.

The field of pollution control provides a textbook example of government intervention in the marketplace. The reason for such government intervention is that pollution imposes external costs (i.e., those on a third party) on society that are not reflected in the profit-and-loss statements of corporations

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rvice is mitigated. Also, advertising among doctors, particularly related to price, is still generally prohibited, which minimizes the flow of such useful information to the consumer. Finally, the proliferation of malpractice lawsuits has markedly raised insurance costs for medical providers, as well as causing them to practice "defensive medicine" with redundant procedures, both of which escalate medical costs inordinately. Thus, in the field of medical care, market forces function poorly, which is why government has had to intervene. The elderly and poor have been the most impacted by the health care crisis in the U.S., the latter because of a lack of affordability and the former because of their extensive need for such care. As a result, the federal government set up Medicare for senior citizens and Medicaid for the poor (the latter along with the states) (Castro, 1991). In this way, the general taxpayer in effect provides and subsidizes medical insurance for those two heavily impacted groups. While the net result has been more and better medical care for millions of vulnerable Americans, costs have continued to escalate out of control, which have strained the taxpayer and federal (and state) budgets severely. Antitrust
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Some common words found in the essay are:
Antitrust Laws, Pollution Control, Health Care, Antitrust Act, Intervention Introduction, Commission FTC, Especially Deal, Vs Competition, Foreman Castro, Violation Act, byrns 1987, external costs, free market, pollution control, medical care, government intervention, antitrust laws, market forces, impose external costs, impose external, marginal revenue, pollution control medical, control medical care,  pollution control, marginal revenue price,
Approximate Word count = 1875
Approximate Pages = 8 (250 words per page)

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