Economics Essay Example | Topics and Well Written Essays - 500 words - 14

Economics - experiment ExampleThe first situation is the traditional capitalist approach where the government adopts a totally give off policy allowing the resources to be used by nonpublicly owned enterprise, reducing protection to topical anaesthetic industry and agriculture by lowering import tariffs and allowing free competition. The second approach (communist) is heavy governmental involvement in the economy where all resources are publicly owned and the government decides their allocation and use. However, it is wonted(prenominal) to find a middle path adopted by most countries including the US.Governments cannot distinguish companies that will execute well and their reasons for entering a particular area of the economy frequently targets serving of social causes and policy-making ends rather that those of economics. Examples are, the distribution of wealth, regulation of competition, supplying infrastructure etc. This leads to a diversion of resources to non-productive enterprises and away from private hands that could have utilized the resources more efficiently and effectively stops investment/ competition from abroad. exit of trade can result in competition for goods and services leading to efficient utilization of resources, better standards of living, and economic growth. Despite this, it is necessary for governments to address certain areas that private enterprise would otherwise neglect or the benefits of economic growth would not percolate down to the economically backward sections of society. For example, the defense of the country is not an issue that private enterprise can attend another example is the provision of health care, if completely privatized good health-care would become out of reach for large sections of the economically weak.Either the neo-classical rationale of market unsuccessful person in the provision of public goods and need to lessen the effect of externalities etc. or the evolutionary