What arguments can be made for government regulation of ...

[ishan]

What arguments can be made for government regulation of concentrated markets? What arguments can be made against such government regulation?
 
  What will be an ideal response?

Question 2

Refer to Figure 10-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?
 
  A) The quantity of loanable funds being demanded in the market is less than 90 million.
  B) The loanable funds market is in equilibrium.
  C) There is a surplus of loanable funds in the market.
  D) There is a shortage of loanable funds in the market.

[mmj22343]

Answer to Question 1

Arguments for government regulation generally rely on the fact that high levels of concentration lead to inefficiency and thus the government should act to improve the allocation of resources. Arguments against government regulation often point to the fact that the most effective barriers to entry are those which have been created by the government. Thus, the outcome with government involvement can end up less efficient than it would have with no government involvement.

Answer to Question 2

C