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Q. Why does government undertake an economic activity?
If ever an activity has large externality or spill over and includes a large number of people, it may be found better that government undertakes it. As David Hume once pointed out, it is easy for two persons to agree/bargain for terms of draining a field affecting them but it would be very difficult for a large number of persons to make the decision on terms of sharing cost of drainage.
In terms of the debate in the media on state owned enterprises ,explain the decreasing cost case and the possibility of privatisation of SOEs such as Eskom and SAA
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Consider the Edgeworth box with the production of consumption goods B and health- investment goods I. (a) Briefly explain the derivation of the contract curve. (b) How does one der
Q. Why does government undertake an economic activity? If ever an activity has large externality or spill over and includes a large number of people, it may be found better th
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