fruitfox
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#1
Report Thread starter 11 years ago
#1
a) Explain how, by adversely affecting the environment, economic activity can lead to market failure. (20 marks)

b) Evaluate the view that government intervention can correct all market failures caused by the effects of economic activity on the environment? (30 marks)

Please help, any ideas would be welcome!

Thanks
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Adam92
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#2
Report 11 years ago
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Lol, just answered this in the a-level section.
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rafi888uk
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For thoses sort of questions you have to structure your answer properly to gain higher marks. For example explain what market failure is and give sme examples, you will atleast gain about 2 or 3 marks just for this.

i think for question two,, just give examples of market failure e.g negative externality, imperfect information

How government attempt to correct market failure.. e.g they use taxation or subsidies... you can say that government may not always correct market failure because they dnt know exactly how much tax to put on or subsidies to give.........government intervention to correct market failure could lead to government failure...coz if they put on too much tax it would lead to a disaster coz nobody would produce anything ( Fall in economic activitiy) sorry ma answer is not perfect but its smething like this..... just by mentioning those points, you will atleast get 10 marks n then to discuss them even more

Economic activity can fall or increase , it increases because of increase in demand for goods or an increase in expenditure etc vice versa. If the economy is operating at near potential ouput then according to keynsians an increase in economic activity could lead to inflation
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JonCatalan
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Although not a complete answer to #2, I'd suggest looking at this blog entry (written by moi). I also suggest reading the book Meltdown by Thomas Woods Jr. The Austrian School of Economics believes that "market failure" is caused by government intervention (through laws which stifle competition or force businesses to do something - such as, force them to give out loans to a certain amount of poor families) and the Federal Reserve (through credit injection to artificially decrease interest rates). And, as a result, government intervention can't solve it.
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Adam92
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I know, but I prefer economics.

Last edited by RK; 6 months ago
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