3.The government is considering the provision of socialsecurityto the retired and disabled.

a.What are the market failures that could have given rise to this policy?(2 points)

b.What are the possible forms of government intervention? How do private sector responses weaken, or reinforce, the intended effects of the policy?(4 points)

c.What are the major efficiency consequences of the policy?(2 points)

d.Are there important instances of trade-offs between equity and efficiency in the policy design? Explain.(2 points)