The government plays a critical role in the operation and regulation of markets. There are multiple reasons why a government may choose to intervene, including supporting producers (usually farmers), aiding low-income households, influencing the market output and consumption levels, correcting market failures, and promoting equity.

Definition: Governments often provide assistance to specific sectors, most commonly farmers. This is because agriculture is crucial for both food security and the economy.

Real-world Example: Consider the European Union's Common Agricultural Policy (CAP). The CAP provides subsidies to farmers in EU member states, stabilizing their income and ensuring food supply.

Definition: Governments step in to ensure affordability of basic goods and services (like food and housing) for low-income households.

Real-world Example: The US government's Supplemental Nutrition Assistance Program (SNAP), often known as food stamps, is a prime example. SNAP helps low-income households buy nutritious food.

Definition: Through various policies, governments can manipulate the level of output in a market to ensure stability and protect domestic industries.

Real-world Example: Governments use methods like import quotas to protect domestic industries. For instance, the US has put quotas on sugar imports to protect its domestic sugar industry.