Government and Business

Syllabus tag: KCSE | Business Studies | Form 2 | Topic 9 Government and Business

Lesson objectives

By the end of this topic, you should be able to:

• Explain the reasons for government involvement in business.
• Describe the methods by which government becomes involved.
• Discuss the merits and demerits of that involvement.
• Explain consumer protection, its need and its methods.

Summary

Government participates in business as producer, distributor, regulator, adviser, promoter and consumer. It intervenes because markets left alone under-supply some goods, over-supply harms, and allow exploitation. Its methods are regulation, licensing, taxation, subsidies, price controls, direct ownership and trade policy. Consumer protection exists because buyers and sellers do not have equal information or power.