" Economics Essay-custom essaysTC:- QNN-MVL-LA8B Table of Contents1. Introduction ......................................................................................................................................... 22. Economic Theories .............................................................................................................................. 22.1 Applications of Economic Theories ........................................................................................... 32.2 Critical analyses on government intervention .......................................................................... 32.2.1 Deadweight loss due to market failure .................................................................................. 32.2.2 Government intervention to prevent the market failure ..................................................... 42.3 Arguments ................................................................................................................................... 52.3.1 Regulating same degree in market power ............................................................................. 52.3.2 Market power .......................................................................................................................... 62.3.3 Deadweight loss ....................................................................................................................... 63. Conclusion ........................................................................................................................................... 8References ................................................................................................................................................ 81 1. IntroductionEconomics is the social science for studying about the production, distribution andconsumption of goods and services. It is a complex social science that spans from mathematics topsychology. A country's economy contains of three major economic agents in it. That isconsumers, firms and government. Deadweight reduction diminishes those generally speakingeconomic surplus, which is those whole about producer Also customer surpluses, thereby thosemaking budgetary wastefulness. Market power leads to the dead weight loss. It depends on thedifferent type of products.The objective is to restrict market monopoly by the government. Government shouldrestrict market power, but not always. It depends the various product. The government pursue bythe way of the intervention in the markets and the market power must be regulated in the samedegree. The argument is discussed for the government using the economic theories.2. Economic TheoriesThis is mostly studied by the economists. It is a kind of bias which is natural. The economy ofthe industrial organization mainly concerns the working of both the industries and the markets. Monopolyhas a kind of special environment of the monopoly which is natural and finally has more advantages anddisadvantages. A different search was launched once for the structural lines which defines the uniquewindow of the competition. This leads to better performance economically. An important and a betteridea is that the competition of the policy that directly cannot be left to the policy. They have the economicreasons in robust manner. The behavior and the structure are much better than the others. Taking into anaccount that the legal and the policy environment which is relevant. It mainly aims at focusing on theeconomic profits in the environment which is competitive nature. 2 2.1 Applications of Economic Theories? Public goodsPublic goods also referred as a product. It helps the user can able to access the without decreasing itsavailability to another. Public goods are typically divided into two different aspects. That is noexcludability and another one is Nonrivalrous. Nonexcludability- it defines that the services areprohibitive.? Deadweight lossThis is also named as the loss of the market inefficiency. Some of the reasons are taxes, price floorsand monopoly pricing. It is a kind of economic loss in terms of the customer’s utility so that theallocative efficiency is failed to reach.? Market powerIt defines that the organization ability to manage the overall cost of product by manipulating itssupply, demand. Often they maintain the market share(Papatheodorou, 2006). Market power dependson the market structure.? MarketfailureIt is a situation. It does the allocation of products and services is not efficient. That is, therealready have another result where an individual can make a better-off.2.2 Critical analyses on government interventionThe societal and economic issues of monopolies are clear. To know the effects of thesehuge corporations, the government has tried, through both legislation and court cases, to maintain as wellas regulate the monopolistic businesses level in the economy.2.2.1 Deadweight loss due to market failureThe combination of a monopoly is have one necessary rule called one price, which forces theseller to sell all the products at the same price to all the buyers. So this gives the result asdeadweight loss. It also create less amount of surplus and less in efficiency than a competitivemarket. Monopoly becomes inefficient as well as less innovative over time. Because they are notready to mingle with other providers.it is not perfect market that restricts the solution in anattempt to reduce the overall profit.3 for example, let take you have a monopoly, in this case it select to produce the where MRequals to MC, instead of where the society marginal advantage equal to the MC.point ‘A’defines where the monopoly make a decision to produce, and point ‘B’ defines that where theproduction would take place under correct hypothesis. The overall difference between the MBand MC between that point leads to the deadweight loss, which is caused by the monopoly.2.2.2 Government intervention to prevent the market failure? Regulation for imposing business model control On An allowed market, organizations might pick up syndication power; this empowers them tosituated higher costs to buyers. Administration regulation about restraining infrastructure might promptmore level costs What's more excellent investment effectiveness(Pettinger, 2012)..? The negative externalitiesThe market which is free provides the most social outcome and there are externalities in the part ofconsumption and in the production. For instance, get a real time model of a firm which has the profit butignores the external costs of the pollution through burning of the charcoal. The social welfare getsdeclined. By the production of the taxing, there are pollution costs and it encourages the other forms ofthe production of the energy. Finally there will be a net gain in the welfare in terms of social.? The merit goods The goods like health care and the education are not actually the public goods. But they areconsidered to be the public goods. The worldwide education which is provided by the government makessure that the opportunity to gain the education is more beneficial(Marcuzzo, 2014). The provision will beunequal in the market which is free. The opportunity to gain the education for the welfare of the humanbeing has strong benefit socially.4 Government need be restrict the market power. Administrations bring a number for approaches thatinfluence restraining infrastructure and business force. Two that would planned to decrease syndicationare regulation What's more antitrust strategy. However, there would additionally strategies that purposelybuild syndication (Pettinger, 2012). Patent laws need aid an instance on which there is a percentagedistinguish that those Investigation from claiming effectiveness may be static yet the economy ischanging.2.3 Arguments There is an intervention for overcoming the recessions and then it reduces the situation ofunemployment. If a situation occurs that the government reduces the amount spending then there will be abigger fall in the growth of the economy. The government need to prevent the boom in the field of theeconomy. If there is a collapse in the money spent the bank has to print the money.2.3.1 Regulating same degree in market power Market power regulate the same degree in the market. It depends on the various product. Some ofthe business have the substantial market power. A business will divide the rules, if it has a same degree ofmarket failure. This process based on the different type o0f products in the market. For example letassume that butter and margarine are3 in the same market, you have to make sure whether they aresubstitute for each other. If any change in the butter price. Customer may switch from butter to margarine,or else the customer shift to margarine to butter. If the customer shifted to margarine so there is no profitfor butter producers. Likewise to the margarine producers. So you need to consider both the products tobe substitute and the same market.? Market failure Elasticity theory Elasticity theory mainly used to defines, hoe the changes made in the demand as well assupply related to the changes in the producers price. Formula for change,This below figure defines that changes in both ‘p’ and ‘q’. the slanting line referred as demand curve.Price demand for many units. When the price is low. That time demand may increase.5 "