Government Policy for UK

Government Policy For UK
Name Course Instructor Date
1 Market failure
Market failures are the negative consequences of its operation and occur when there is an inefficient allocation of available resources. There are different market failures, such as public goods, merit goods, imperfect competition, and externalities. In functioning free markets and price setting is through the forces of demand and supply. However, the market is not perfect, and sometimes the free market leads to undesirable situations such as social inequalities, imperfect competition, and pollution, which are examples of market failures.
A merit good is one that is under-consumed or under-produced and requires more public finance such as education. There is market failure in providing merit goods w with health and education being undefended in the UK. The coronavirus pandemic has shown the defiance of the UK National Health Service (NHS) underfunded and cannot meet UK residents' medical and health care needs. There are third parties who benefit from merit goods and this affects the social welfare.
A public good is one whose consumption is indivisible, and that can be shared by all members of a community without exclusion and is mostly managed by State. This implies that a public good is mostly accessible to anyone without any major restriction. Public goods that are consumed together are non-excludable, and it is non-rivalry. Some examples of public goods are law enforcement street lighting, parks, beaches, among others. It is impossible to prevent people who have not paid for public goods from using them, and the state still needs to provide these unprofitable goods and services by the state. 
Imperfect competition is a market situation in which individual sellers can significantly affect the market price of their products or services. Both sellers and buyers have different information about the products or services. Markets are imperfect as there are entry barriers for competitors in the market, and firms lack may lack adequate market supplies. Cases of imperfect competition are an oligopoly, monopoly monopolistic competition, and duopoly. Market participants (consumers and producers or sellers) make decisions lacking full information. 
An externality is when the costs or benefits of producing or consuming a good or service are not reflected in the market price. Decisions made by one party affect third parties who are not directly involved in the original transactions. The equilibrium price product or service is not an accurate reflection of the costs and benefits, leading to an inefficient allocation of limited resources. Externalities are one of the market failures that require government intervention. The state can use various instruments ...