Welfare economics

Abstract

It was stated in Chapter 1 that it is usually accepted that the role of economists is to explain how the economy operates and that is the government’s responsibility to decide what the objectives of economic policy should be. The reality of the situation, however, is that, although the government may decide the broad principles of economic policy, in order to actually implement these policies economists are often called upon to suggest more specific guidelines. For example, a government may decide that private monopolies exploit the consumer by charging too high prices, but it is left to economists to suggest exactly what a ‘fair’ price might be.