Answer to Question #189637 in Economics for Sipho

Question

Which of the following is not an acceptable intervention by the public sector in a mixed economy?

[1] the provision of funds for public goods such as parks and streetlights

[2] regulation of the pricing behaviour of monopoly industries

[3] stabilisation of the economy during periods of economic instability

[4] regulation of the price increases that result from changes in patterns of demand and supply in the competitive market

Answer 1

Regulation of the price increases that result from changes in patterns of demand and supply in the competitive market is not an acceptable intervention by the public sector in a mixed economy, because it creates a deadweight loss, and there is no need in such intervention.

So, the correct answer is [4].