I'm not too sure what you're getting at, but I think you mean the role of the Govt.
The government intervenes in the market economy to ensure that socially desirable outcomes are achieved when the economic problem is solved.
What to produce
- illicit drugs are banned because society deems them as harmful and so Govt bans the production of this.
- govt can be the producer and can provide collective goods which private firms are unwilling to produce eg railways
How much to produce
- some goods are deemed more desirable, and so govt grants subsidies to encourage greater production.
- Some goods are limited, using quotas.
- Encourages the production of merit goods
How to produce
- Govt can influence factors of production and how they are utilised, eg through IR laws, can set minimum wage rates
- occupational health and safety laws affect how goods and services are produced
How to distribute
- affected by govt policies
- high income inequality is socially undesirable, so a progressive income tax system allows this re - distribution of income to occur, through social welfare payments.
The role of the govt in the Australian economy causes Australia's economy to become a mixed market economy.
Hope that helped.
