Essay --

The term ‘market failure’ refers to the quantity of products required by consumers not being equal to the quantity supplied by the suppliers; this could mean that the quantity of products demanded are too high and there is a lack of supplies or that quantity of products demanded are too low and there is a surplus in supplies. The Government in this case plays a significant role in order to control the fluctuation of quantity demanded and supplied in many ways in relation to public goods, merit goods, externalities and imperfect competition. Public goods are provided by the Government, for example street lights. They are non-excludability goods because it cannot be provided to only those who pay for it through taxes so those who have no paid for this can still benefit from this good. If public goods like the street light were left for us to pay individually (like a private good that can only be used if paid for) there would be less public goods available. The Governments role in this department is to make sure a suitable level of public goods is provided. The government intervenes in this by taxing workers, organisations and consumers which result in public revenue. Public revenue can then be used on public goods to ensure enough of it is provided. Another example of a public good is public parks and the fire department that the government provide. Merit goods are different compared to Public goods; they are goods that the government need to interfere in as it would be under-consumed if they did not. They are provided both by public and private sectors. Education and the National Health Service (NHS) are Merit goods. If education was left for us to fully pay for it, then there would be less educated people due to the lack of fina... ... in supplies meets the demand. The increase in supplies was encouraged by offering high wages and salaries to farmers so this overall improved their income. This policy still present today works as agricultural workers being financed mainly through the CAP’s single farm payment which is given yearly to aid the farmer’s work. It now also includes care for environmental pollution, animal welfare and biodiversity. Farmers now being paid through the Single Payment Scheme have set rules they must achieve in order to receive the payment. Farmers gaining the payment have the option to produce any goods on their land however they must also keep their land in good condition and maintain this condition. If the farmer fails to do so, the payment they regularly gain will be lower. In relation to their condition of their land, animal welfare and the environment must be valued.