BUS061 HW10

BUS061 HW10 - Sharon Ng Professor Diamond BUS061 24 July...

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Sharon Ng Professor Diamond BUS061 24 July 2011 Chapter 10 Homework 1. Please list and explain the flaws in the market that necessitate the government's regulation of business. Answer: The flaws in the market that necessitate the government’s regulation of business include natural monopoly, destructive competition, externalities, and inadequate information. Natural monopoly is when a firm can supply the entire market for a good or service more cheaply than any combination of smaller firms. Without government regulation, it can restrict output and raise prices without fear of competition. People engage in destructive competition when companies dominate an industry. Externalities are costs of production that are borne not by the enterprise that causes them but by society. Inadequate information is a flaw because competitive markets operate more efficiently when everyone associated with them have enough information to make informed choices. 2. Please list and explain the social and political reasons for government
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This note was uploaded on 08/30/2011 for the course BUS 51 taught by Professor Henderson during the Summer '11 term at West Valley.

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BUS061 HW10 - Sharon Ng Professor Diamond BUS061 24 July...

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