Question

explain five causes of government(non-market) failure

the marginal damage averted from pollution cleanup is             MD=200-5Q.the marginal cost associated with pollution cleanup is MC=10+Q

what is the optimal level of pollution reduction?

show that this level of pollution reduction could be accomplished through taxation

what tax per unit would generate the optimal amount of pollution reduction?

Explain any five reasons for the growth of government expenditure in developing countries

Using well labelled diagram discuss the two main types of externalities and their correction mechanism      12marks

Answer 1