a. Government intervention as a buyer and seller directly in the market
Government intervention as the buyer intended to protect the producers and government intervention as the seller intended to protect consumers. For example: to keep the rice price decline at the time of harvest, the government through its institution act as a buyer and vice versa during a famine in the government acting as the seller to remove the rice from the national stock for rice prices level are not soaring to the detriment of consumers.
b. Maximum and minimum price fixing by government
1. Maximum price fixing, are intended to protect the consumer society connect with the high price. Maximum pricing always below market price, but not necessarily all be finished because if the domestic supply is limited so it will cause problems, namely: the occurrence of surplus demand, the existence of a fair system of rationing, the black market, the government's actions to combat black market.
2. Minimum price fixing, are intended to protect the producer connect with the low level of prices. Maximum price fixing is always above the market price where the producer only gets normal profits.
c. Government intervention indirectly through taxes and subsidies
This form of intervention is that many actions undertaken by all countries in the world in its efforts to influence indirectly in both the market equilibrium price and quantity of goods traded.
Intervention through taxes is intended to fill the state coffers to finance routine expenditure and development. In addition, the tax also as a tool to regulate the national economy.
If the manufacturer is generally taxed will happen: the price level rises, the number of production falls, the supply curve shifts to the left above, there was division of the tax burden passed over onto the consumer.
When consumers are generally taxed then will happen: consumers' purchasing power is reduced, total demand is reduced, the demand curve shifts to the left down, the price level down, there was division of the tax burden passed over onto the manufacturer.
Government action to create prosperity throughout society can also provide subsidies to the community both consumers and producers. Form of subsidy in the form of money or decrease in the price of goods. Subsidies in the form of money intended to provide additional income while in the form of lower prices for consumer goods intended to consuming less than actual goods, the rest is borne by the government. For producer subsidies will lower the selling price so that demand will likely increase.
If producers are given subsidies in general it happen: the price down, the number of goods offered increases, the supply curve shifts to the lower right, the distribution of subsidies. Meanwhile, if consumers are given subsidies in general it occurs: its purchasing power increases, consumer demand increases, prices rise, the demand curve shifts to the right above, the distribution of subsidies.