The recent economic growth resulting from government policie

The recent economic growth resulting from government policies of newly industrializing nations such as India and China has increased environmental strains on global air and water systems. The negative externalities associated with this economic growth demonstrate that the best economic system is one in which all economic decisions are made by individual households and firms without any government intervention. This view A. ignores the need for the government to intervene when there is a failure in the market such as negative externalities. B. ignores the problems with an inequitable income distribution. C. encourages monopolization of industries. D. recognizes that the government is inefficient and economies would function better without the government

Solution

Option A. ignores the need for the government to intervene when there is a failure in the market such as negative externalities.

Expalantion: Negative externalities take place when the social cost of production is higher than the private cost of prduction. This happens because of market failure. In such cases, the government can intervene to equate production level with the socially optimal level through taxes and other policies.