The Government Often Intervenes When Private Markets Fail to Provide

question 19

Essay

The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?

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Definitions:

Leukocytes

White blood cells that are part of the immune system, involved in protecting the body against both infectious disease and foreign invaders.

Neutrophil

A type of white blood cell important in the immune system's response to infection.

Eosinophil

A type of white blood cell involved in allergic reactions and defense against parasites.

Warfarin

A medication used to prevent blood clots by inhibiting vitamin K-dependent clotting factors.