Explain market failure in terms of misallocation of resources, social efficiency and welfare loss, using a diagram.

MAIN BODY

Each paragraph should make a different point.
Quotes should not be used to make your point; this is poor academic practice and the passage should be paraphrased. Quotes should only ever be used to support a point you have already made.
Diagrams are required for at least two of the examples of government intervention to correct market failure e.g. tax on a negative externality of consumption caused by a demerit good; producer subsidy to increase consumption of a merit good.
All diagrams must be sourced and explained within the essay.
To source a diagram or chart you need to put:
Author’s/authors’ family name/names, year of publication of the source and page number E.g. Gillespie (2019:23), Mankiw and Taylor (2017:56)
Theory (25%)

  • Explain market failure in terms of misallocation of resources, social efficiency and
    welfare loss, using a diagram. (8 marks)
  • Explain government intervention – why governments intervene and how
    governments intervene, the effect on the functioning of markets. (8 marks)
  • Explain government failure and at least three causes e.g. distortion of price
    signals, unintended consequences, imperfect information, rent seeking behaviour,
    public choice theory, moral hazard, regulatory capture, using a diagram where
    appropriate. (9 marks)
    This section must not be any more than 400 words.

Use three researched examples from a country of your a choice 45% (3 x 15%).
The interventions should have occurred after the year 2000.
Each government intervention must be a different type e.g. regulation, tax, new law, subsidy, quota,
information campaign. Each example must show evidence of government failure.
Evaluate the outcomes of the interventions in terms of government failure.
– State what the example is e.g. subsidy to encourage the employment of 18-21 year
olds in UK.

  • Briefly explain the economic theory of each example (type of market failure with diagram).
  • Explain the aim of the intervention and the nature of the intervention, using a
    diagram. The market failure and the intervention may be shown on the same diagram.
  • Evaluate the benefits and costs of the intervention in terms of government failure.
    The focus must be on government failure caused by the intervention and its consequences, which may be long term.
    Each example is of equal weight and should by approximately 250 words in length.
    This section should be approximately 750 words.

MY first example is the living wage ( price control) which introduced in 2016 I have a special diagram from gilespie ( page 183) for that


My second example is sugar tax (negative externality of consumption)

İt is from economics online 2020
https://www.economicsonline.co.uk/market_failures/demerit_goods.html/


My third example is bus operators service grant ( positive externality of production)
https://www.gov.uk/government/collections/bus-services-grants-and-funding

Conclusıon
The evidence you have presented in the essay will enable you to make a judgement about the extent to which ‘government interventions do more harm than good’.
This section should be approximately 200 words.
Begin the conclusion with

This essay has shown…
The evidence presented in the essay would suggest…
Government interventions cause/ do not cause more harm than
good because…
Or something similar

Reference LIST

Make sure you include a Harvard Reference List at the end of your essay. All sources listed in the Harvard reference list must be cited in the essay; this will be checked. The Reference List should be
on a new page
created using the Harvard referencing system as used in EAP
https://library.leeds.ac.uk/referencing-examples/9/leeds-harvard
in alphabetical order by the family names of the author or authors example:
Anderton, A. (2008) Economics, 5th edition, Harlow, Pearson Education (no pages for books)
all authors of a text must be included. (‘et al’ is not acceptable)
information taken from websites must be referenced in the same way and on the same list. Do not make a separate list. The URL of a website must be included with the access date.
Essays without a Harvard reference list may not achieve a ‘Pass’ grade.

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