Mixed economies

Most economies today are “mixed economies,” in which there is a both a public sector and a private sector. Explain the following two justifications for government intervention in the economy: public goods and externalities. What is the relationship between the availability of public goods and private goods? In so doing, consider the production possibilities schedule.

Answer preview

From the case study, it is clear that William Thompson is laboring under the weight of immense stress due to financial challenges and trauma resulting from spending many years in the war in Iraq. William Thompson’s biggest fear is having his family and other relatives perceive him differently because of the mental anguish that is affecting him. In the case study, Mr. Thompson communicates superficially with his wife because he thinks it is the best way to protect her from the horrors he experienced during his service in Iraq. Similarly, he has resorted to drinking to address his issues rather than opening up to the members of his family. In light of the highlighted facts, Mr. Thompson may retrogress on the healing journey he has taken. He perceives that the close relationship between his psychologist and his brother Henry may lead to sharing confidential information passed during the therapy sessions. The psychologist’s failure to disclose the professional link to Andrew’s TV show may foster a perception of betrayal in Thompson’s view. The perceived betrayal may cause Thompson to drop out of the therapy engagement and taint his image of psychologists by portraying them as deceptive and dishonest.

[3801 Words]

Mixed economies