Effects Of Market Failure

‘Market failure occurs when there are too few markets, non-competitive behavior, or non-existence, leading to inefficient allocations.’ (Ledyard, 2008.) Market failure describes a situation where resources cannot be efficiently allocated to get the greatest possible consumer satisfaction. That’s due to the breakdown of price mechanism caused by factors such as establishment of monopolies. And government intervene in the economy to allocate resources as a result of market failure. • Merit goods

Merit goods are those benefit to consumers but their value cannot be fully realized at the time of consumption. And the consuming of merit goods is beneficial to other individuals and society, the benefit cannot be realized, too. One of the well-known

• Externalities

Externalities are the uncompensated individuals’ actions impact on the well-being of bystanders. Individuals have no choice but take such actions and these externalities are negative or positive. The noise may be the most annoying negative externality for individuals. There is often much noise made by surroundings unconsciously which break up our rest, such as the midnight shout, car horns and loud pets. Government internalize externalities by altering incentives so that individuals can take account of the external effects of their actions or by imposing a tax on the producer to realize the socially desirable equilibrium quantity. And final to achieve the Socially Optimal Output. 2.0 The welfare policy

Welfare state is a system of government-run organizations which aims to help individuals to have a good quality of life by providing a safety-net of provisions to ensure people’s wellbeing. It is a social system in which the state takes responsibility for the social and economic wellbeing of its citizens, especially in matters of health and social

The social welfare seen as a right of citizenship. The components of welfare state in the UK are social security, health, housing, education and personal social services. Health is a term used for personal health-care assistance, in whatever form it may take. It is the core of British welfare state. All services of health-care are free of charge, the provided services are based on the need instead of the ability to pay. The UK expend a large amount money on health every year. It came first on in eight measures what are used to measure the care among 11 countries in the Commonwealth Fund study. The UK cares most about citizens’ personal health and the public effective and coordinated which provides many conveniences to citizens. Governments raise money to pay for welfare through general taxation, National Insurance payments and Value-Added Tax. The government expend a large amount of money to provide welfare to its citizens, the money used to citizens also gained from citizens by receiving taxation from them and they pay the National Insurance every year, that’s also help government to pay for the welfare. Government also set a series of policies to ensure the welfare can be truly received by the citizens, and person who violate the policies will be