Assignmenteconomic theory Assignment Example | Topics and Well Written Essays - 500 words

Assignmenteconomic theory - Assignment Example On the other hand the government will maintain monopolies whereby the cost of producing certain products are too expensive example the rail way industry. When negative externalities occur the government has a role to play in resolving the problem example pollution, the government also has a role to play in maintaining a competitive market in the economy and eliminate monopolies and oligopolies in order to achieve optimal pricing of goods and services in the economy. Income discrimination occurs when there are wage differences that are as a result of differences in ethnicity, gender, age and race, the government role is to eliminate wage discrimination through the implementation of policies, the existence of competitive markets also eliminate the problem of income distribution and therefore the government will encourage competition in order to eliminate income discrimination. An example of income discrimination in the US is that studies show that whites are paid higher wage rates than other races in the US. The role of the government in this case is to encourage competition and implementation of policies that discourage discrimination. This policy measure is appropriate given that income discrimination leads to the marginalization of certain groups.