part a- b

Question 4 20 points Art ...the reason that the invisible hand often sooms invisible is that it is often not there. Whenever there are extematto-where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated market will not work well...Markets. By themselves, produce too much pollution Markos, by themselves, also produce too little basic research. Goverment plays an important role in banking and securities regulation, and a host of other areas Government is needed, almost all would agree at a minimum to enforce contracts and property rights..." (Joseph E. Stiglitz) (Total 20 marks) A) Explain the four types of externalities covered in the lecture with the aid of properly labeled diagrams. How can government tax or subsidy policy be used to internalize these exdemnalities? (10 marks) B) Discuss all other potential sources of market failure (or when Invisible hand is missing in Sugitz's comment and explain government's role in terms of addressing each aspect of market malfunctions. (10 marks) For the toolbar, press ALT+F10 (PC) or ALT FN+F10 (Mac) T: Y !! 10 ii O ... Moving to another question will save this response. Question 4 of 5 estion 4 20 points Save ..the reason that the invisible hand often seems invisible is that it is often not there. Whenever there are externalities where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated-market will not work well Markets, by themselves, produce too much pollution Markets by themselves, also produce too little basic research... Government plays an important role in banking and securities regulation, and a host of other areas, Government is needed, almost all would agree, at a minimum to enforce contracts and property rights... (Joseph E. Stiglita) (Total 20 marks) A) Explain the four types of externalities covered in the lecture with the aid of property labelled diagrams: How can government tax or subsidy policy be used to internalize these externalities? (10 marks) B) Discuss all other potential sources of market folure (or when invisible hand is missing in Stiglitz's comment) and explain govement's role in terms of addressing each aspect of market malfunctions. (10 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BTS Paragraph Arial 10pt LE ALI: iii X O a