priority on the problems of those who are not well organized or who are less likely to vote, the government may

fail to act when it could do some good. In these and other cases, there is no automatic reason to believe that

government will necessarily make economically sensible choices.

“The true test of a first-rate mind is the ability to hold two contradictory ideas at the same time,” wrote the

American author F. Scott Fitzgerald (1896–1940). At this point in your study of microeconomics, you should be

able to go one better than Fitzgerald and hold three somewhat contradictory ideas about the interrelationship

between markets and government in your mind at the same time.

First, markets are extraordinarily useful and flexible institutions through which society can allocate its scarce

resources. We introduced this idea with the subjects of international trade and demand and supply in other
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