A. When the market fails there are calls for the government to step in and clean up the mess. Here, we consider three market failures:

1. Externalities,

2. Public goods, and

3. Informational problems.

Examine each market failure and the effect of each failure considering perfect competition as a benchmark.

B. Write a brief report (500 words) addressing the following:

1. Are there sources of market failure other than those listed in your readings?

2. Describe how government intervention to address a market failure might worsen the situation.

3. Provide an example of where government intervention does work and why that is so.