Davenport University Week 7 Role of Government and Economy Questions

1. What is the rationale for government involvement in the market economy? (p. 555 #1)

2. What is the role of government in dealing with benefit externalities? With cost externalities? (p. 555 #3)

3. Discuss the economic justification for a merger. (p. 555 #8 part1)

4. Briefly describe a merger or acquisition that has been in the news within the past year and provide a link to the information.

What is the economic justification for the merger?

Does the merger or acquisition substantially reduce competition?

Will the industry tend to remain competitive after the merger, or will it tend to become more concentrated (as with an oligopoly or monopoly)?

Will consumers benefit from the merger or acquisition?