Unit 2.8(3): Government intervention to manage externalities, merit and demerit goods

IB Economics: Unit 2.8(3): Government intervention to manage externalities, merit and demerit goods

We know from the previous chapters that cover externalities along with merit and demerit good that they lead to market failure. Without any government intervention resources are misallocated and the welfare of a country’s citizen’s is not maximised. Governments intervene when there is market failure to affect resource allocation and improve the welfare of their country"s citizens. Governments do this by trying to...


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