1. Identify the type of market failure here and why dies market failure occurs in this scenario? 2. Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. 3. Carefully explain how the imposition of the chosen government policy impact consumer surplus, producer surplus and total surplus in this scenario.

1. Identify the type of market failure here and why dies market failure occurs in this scenario? 2. Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. 3. Carefully explain how the imposition of the chosen government policy impact consumer surplus, producer surplus and total surplus in this scenario.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter16: Public Goods And Public Choice

Section: Chapter Questions

Problem 14PAE

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