In a mixed-market economy, when does the government typically regulate producers?

• A. When producers' actions may harm consumers or the environment
• B. Whenever producers make a profit
• C. Never, because the market is entirely self-regulating
• D. Only when producers request government intervention

Answer: (A)

Verified step by step guidance

1. Understand the role of government regulation in a mixed-market economy, which combines free market principles with some government intervention to correct market failures.
2. Identify situations where producers' actions can lead to negative externalities, such as harm to consumers or environmental damage, which are cases of market failure.
3. Recognize that government regulation is typically applied to prevent or mitigate these negative externalities to protect public welfare.
4. Note that government regulation is not based solely on whether producers make a profit or request intervention, but rather on the potential harm their actions may cause.
5. Conclude that the government typically regulates producers when their actions may harm consumers or the environment, ensuring the market functions more efficiently and fairly.