Introducing Supply and Demand

4. Government Intervention and Disequilibrium

Socio-Economic Factors

Governments may also intervene in markets to promote general economic fairness. Government often try, through taxation and welfare programs, to reallocate financial resources from the wealthy to those that are most in need. Other examples of market intervention for socio-economic reasons include employment laws to protect certain segments of the population and the regulation of the manufacture of certain products to ensure the health and well-being of consumers.

Former President Bill Clinton signing welfare reform: Former President signing a welfare reform bill. Welfare programs are one way governments intervene in markets.