Identify three government market failures and describe their effects Essay

Identify three giving medication market mischances and describe their effects. As in past brass failures in the world - Essay ExampleIn the end, there is market failure because the market fails to regulate itself to achieve economic efficiency. Market failure results when the government interferes with the market, often for its own satisfactory and success, rather than that of the economy. On the contrary, market failure may also happen owing too government inadequacies if it fails to, or insufficiently, intervenes. Passive government failure refers to a scenario when government intervention would cause a socially beneficial mix of output. The housing card-house, BP oil spill, and payment of welfare benefits are three past government failures in the world that have had drastic effects on the economy and society.The global financial crisis, typified by the housing bubble is a good example of market failure. The downturn born of the housing bubble was a significant market failure that resulted from underpricing of risk, which a form of market distortion (Bernstein 1). There was an defective valuation of opportunity costs and risks. Pricing is a primary building block of capitalism, which demands that correct and great information about a market are provided in a timely manner. People borrowed into high-priced mortgages because of the underpricing of credit. It was either a case of ignorance about the market, because the only way they would pay off the high-priced mortgages is if the prices of houses proceed to increase. Unfortunately, the bubble did not continue to inflate, prices plummeted, and many citizens were unable to service their debts. According to Bernstein, the profit motive coerced the actions of the lenders, because it is passing unlikely that they did not foresee such a market failure. It is the duty of government regulatory bodies to utilise regulatory functions to prevent the housing bubble.The Federal Reserve and a myriad of government agencies focused on the