What is an essential government role in market economies?

[Daniel D]

PLEASE explain this. I'm a senior and I'm really trying to learn this stuff so I can pass my social studies TAKS Test and graduate. I would really appreciate it if the answer wasn't just given.. that helps me to get the question right, yes.. but please, I really need to learn it. :/

The answer choices are

a) to control prices and costs
b) to prevent monopolies and collusion
c) to provide luxury items
d) to mark goods and services

Thanks to anyone who helps.

[simplicitus]

It all depends on whom you ask. There is a whole spectrum of opinions. But none of the options offered are valid answers to anyone.

There are a few extremists who argue that there is no essential government role in a market economy. They claim that even money and the justice system can be handled by private enterprise.
http://en.wikipedia.org/wiki/Anarcho-capitalism

Then there are those who seem to agree that the law and the courts do belong in government hands, but like private banks issuing their own currency or the use of gold as money.
http://en.wikipedia.org/wiki/Laissez-faire
http://en.wikipedia.org/wiki/Private_currency
http://en.wikipedia.org/wiki/Austrian_School

Then there are those who believe in a central bank and government backed and controlled money supply:
http://en.wikipedia.org/wiki/Monetarism

But there is general agreement that once you've gone beyond that, you are out of the realm of a market economy.

Regulation of any sort, whether ensuring that foods and drugs are safe, or eliminating monopolies is a clear violation of the market economy. Ditto for having the government build roads, provide schools, etc.

That's why no developed economy is a market economy
http://en.wikipedia.org/wiki/Market_economy
they are all mixed economies.
http://en.wikipedia.org/wiki/Mixed_economy

Of the 4 choices, the desired answer is probably (b), but the fact of the matter is that since so many governments don't do it, it can hardly be essential. After all, the U.S. didn't even try until 1890, more than 100 years after the founding of the country, and enforcement of the laws have often been deliberately lax:
http://www.nytimes.com/2006/05/05/business/05legal.html