What are three problems that sometimes occurwithin the market that the free market cannot solve? Give an example of each problem. For each of your examples, what action does the government take in order to resolve eachproblem?
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This chapter discusses many "market failures," areas in which the invisible hand guides the economy poorly, and describes the role of government. Is it possible that there are, as well, "government failures," government attempts to curb market failures that are worse than the original market failures? Think of some examples of government failures. Give some examples in which government failures are so bad that it is better to live with the market failures than to try to correct them.
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Government Tools: Discuss tools available to the government to correct a market failure. Provide examples from the textbook. Supply and Demand Equilibrium: Describe how government intervention affects the supply and demand equilibrium. Refer to the simulation game to explain your responses. Consumer or Producer Surplus: Specify which government interventions cause a consumer or producer surplus. Explain how they impact consumer or produce surplus. Provide examples from the textbook.
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