Exercise on Applying the Principles of Economics (Government Role): Solutions

Question: In each of the following scenarios, describe the rols of the government.
Explain how the government's intervention may improve or has an impact on the outcome.
  1. Public highways
  2. Patent laws, which allow software and IT companies to charge high prices for computer applications
Solutions:
  1. Public highways
    2. If we don' have public highways then toll highways will be the alternative, which will be managed by the private sector.
    Hence, if people who drive on highways would pay more compared to people who don't use them then it becomes unfair. However, if fees are related to highway usage then the system becomes fairer.
  2. Patent laws, which allow software and IT companies to charge high prices for computer applications.
    Is it fair that IT companies charge such high prices for computer applications that some people need to use them regualarly. If those IT programs are regulated and controlled by the government, the question is how might IT companies react to that?


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Date of last modification: 2021