Chapter 07: Government Intervention in the Market

Explainer

What you'll learn in this chapter

• evaluate the economic role of the government in a free market, mixed and command economy
• We'll have a look at the tools available to the gov't for intervening/incentivising within the market economy
• develop an understanding of ecomomic regulation and Irish regulatory agencies
• evaluate effectiveness of regulation in the Irish economy

Core ideas

This is a shorter, theory-focused chapter. Among other things, we will look at how EU membership impacts the level of economic planning in the Irish economy.

The size and role of the State can vary widely. In countries like China and North Korea, the State plays a very central role - individuals, firms and the wider economy are all subject to economic planning. In other nations like Singapore and Hong Kong, there is little gov't planning and resources are predominantly allocated by market forces.

Exam focus

Exam questions on this chapter can require you to think outside the box. You could be given a topical issue, for example:

1. the housing crisis
2. rising consumption of vapes and nicotine pouches
3. income inequality

Interactive: Government Intervention

Explore how taxes, subsidies, and quotas shift market outcomes from the free-market equilibrium. Each intervention creates a deadweight loss (DWL) — a measure of allocative inefficiency.