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Market failure economics notes

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Added on  2021-06-15

Market failure economics notes

   Added on 2021-06-15

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Market Failures 1MARKET FAILURESStudent’s NameCourseProfessor’s NameInstitutionCityDate
Market failure economics notes_1
Market Failures 2Market FailuresEconomics is significant in explaining the complex contemporary issues. It further describes the economic behavior of different economic issues. It requires social intervention to address the market failures where the market fails to correct itself. In this case, the government intervenes using various policy measures. Therefore, a clear understanding of the appropriate policy measures can help to address the existing economic problems like air pollution. Air pollutionAir pollution is the real world problem in the second diagram. Firms and individuals participate in the air pollution. For example in the picture, the person smoking causes air pollution. Pollution affects the surrounding environment (Harrison 2001). It is detrimental to the surrounding. Environmental interference not only causes environmental concerns like global warming, but it leads to health complications. It negatively affects the individuals around. For example, those people in the picture feel that their salmon is smoky. Air pollution is a source of market failure. It causes negative externalities which are not reflected in the prices. Hence, it leads to market failure. Economic Explanation for the Existence of Air PollutionDifferent factors cause air pollution. The major air pollutants can either be classified as primary or secondary sources (Reitze 2005). Direct sources like the production of carbon into theair is an example of a primary factor. On the other hand, the interaction of primary factors with other elements which cause pollution are the secondary sources. The conventional sources of air pollution are the primary factors. Burning Fossil fuel causes a higher percentage of air pollution compared to other factors. Fossil fuel produces sulfur dioxide that is harmful. Additionally, agricultural activities produce gases like ammonia which are unhealthy. Furthermore, industries
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