Market Failure Research Paper

National Defense, Prisons (S) Industries that Need o be Regulated utilities, Airlines, Banks As our economy changes what other industries also need to be regulated or De-regulated? C) Externalities companies produce some type of external cost that affects the community. The company would not voluntarily reduce or eliminate this cost unless the government required them to do so. (These could also be benefits that would add to community but not benefit the company in any way. ) (D) Income Inequality Wampum Wage, Welfare Programs, unemployment Benefits, Social Security, Medicaid Areas where our society Is coming more socialized. Assignment: Pick one market ;n which the price system does not produce an equitable price and quantity of output.

Went a paper of 250 words minimum discussion with at least (2) sources cited in the ML format. Include in your discussion: by (1) What action has our government taken in order to provide this good or service in an equitable fashion? (2) What are the alternatives to government intervention? (3) What has been the end result of government intervention? The rise in direct tax has the effect of reducing the post-tax income of those in work cause for each hour of work taken the total net income is now lower.

This might encourage the individual to work more hours to maintain his/her target income, Conversely, the effect might be to encourage less work Since the higher tax might act as a disincentive to work. Of course many workers have little flexibility in the hours that they work. They Will be contracted to work a certain number Of hours, and changes in direct tax rates will not alter that. The government has introduced a lower starting rate of income tax for lower Income earners.

This is designed provide an incentive for people work extra hours and keep more of what they earn. Changes to the tax and benefit system also seek to reduce the risk to the poverty trap’ – where households on low Incomes see little net titanic;al benefit trot supplying extra hours of their labor. If tax and benefit reforms can improve incentives and lead to an increase In the labor supply. This will help to reduce the equilibrium rate of unemployment (the NAIRA) and thereby increase the economy,FSP non;inflationary growth rate.