public sector comprises the economic activities controlled by the government. Hence it is not subject to a competitive market and may lack incentives to control cost, provide good quality service and respond to customers’ needs. On the other hand, public services can be the set of services provided for a large numbers of citizens in which there are potentially significant market failures (broadly interpreted to include equity as well as efficiency) that justify government involvement, whether in production
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Erin Burgwinkle 1/21/15 Macroeconomics 006 Pg. 18 Homework Question 8; a-f 8a. Regulating cable TV prices: Efficiency- This government policy corrects the market failure of market power, or a monopoly, that is often associated with the cable TV industry. 8b. Providing some poor people with vouchers that can be used to buy food: Equality- A difference in economic well-being means that poor people are not able to have access to necessities such as food. Granting vouchers to these
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Who does really pay for our Burgers? Institutional Causes, Effects and Solutions to the Meat Industry’s Contribution to Global Warming WHO DOES REALLY PAY FOR OUR BURGERS? 1. Introduction ‘All across the world, in every kind of environment and region known to man, increasingly dangerous weather patterns and devastating storms are abruptly putting an end to the long-running debate over whether or not climate change is real. Not only is it real, it's here, and its effects are giving rise to
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Discuss whether indirect taxes on petrol should be reduced Petrol is seen as a de-merit good as it can cause market failure as the free market may fail to take into account the negative externalities of consumption (pollution) because the social cost exceeds the private cost. Consumers too may experience imperfect information about the long term costs to themselves of consuming products deemed to be de-merit goods By imposing indirect tax on producers it raises their costs of production, shifting
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Macroeconomic Theory Discussion Section Worksheet 2 Market Failure – Inefficiency and Monopolistic Competition The following quote was taken from the book: “Creating a Learning Society” by Joseph Stiglitz. Explain the market failure described in this quote. Explain how monopolistic competition caused this market failure. “Myriad Genetics obtained a patent on the BRCA genes (which are critical in assessing the likelihood of getting breast cancer). The gene would have been discovered
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Economics is a social science that studies how individuals, governments, firms interact in allocation of resource, distribution of resources and transaction in the market. Public finance is said to be the center of economics that studies government activities in the economics and how government finances their expenditure. The span of government activities in a country are capitalist in which government activities are narrow, socialist where government undertakes most government activities and mixed
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AS Economics Answers 4 Government intervention in markets 1 Remedies for market failure Activity 1, page 163 a It has declined. The state now owns less of the country’s housing stock. b That the state thinks there is less market failure in the housing market now than in 1979. use. Figure 1 shows that drivers do not initially pay for the negative externalities (external costs) they generate. A tax equivalent to the marginal external cost would push price up to PX. Road use would be reduced from
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Government intervention is need when there has been a market failure due to a misallocation of resources. The government intervention is imposed to try and fix the negative externalities produced from the consumption or production of a good or service. In this case the market failure is resulting from the felling of trees for farming and wood purposes. The flood defences are a public good which is a good that is non excludable good and non-rival good. If the government were to pay to for the provision
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tax and/or regulate activities that caused the externality to align the private cost with the social cost (Djerdingen, 2003, p. 2). He advocated that government regulation can enhance efficiency because it can correct imperfections, called “market failures” (McTeer, n.d.). In contrast, Ronald Coase challenged the idea that the government had a role in taking action targeted at the person or persons who “caused” the externality. He believed that government intervention did not necessarily
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Discuss the extent to which regulations alone can be used to correct the market failure associated with the sale of fast-food. Regulation involves the imposition of rules, controls and constraints which restricts freedom of economic action in the market place. Fast-food is a de-merit good which is where the social costs of consumption exceed the private costs. The consumption of de-merit goods can lead to negative externalities, in the case of fast-food, negative externalities such as becoming
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