(a) Some economists argue that government interference in market operations should be avoided as it will lead to distortions and sub-optimal outcomes. Using the concept of Pareto efficiency explain the rationale for their argument in the context of production, consumption and product-mix. Your answer should make use of appropriate diagrams and identify any underlying assumptions (HINT - Your answer should go further than just showing the equilibrium in a diagram. You should discuss why/how this equilibrium will be achieved. A good way to do this is to consider what happens outside of equilibrium) (30 marks) (b) Read the following statement and answer the question below: It has recently been reported that a greater number of general medical practitioners (GPs) are charging higher fees to patients. Some argue that this may lead to those who with lower incomes to be deterred from visiting their doctor. An alternative view is that being able to consult a doctor for free results in over consumption of medical services and large waiting times. i. Discuss the potential market failure(s) involved in the first argument that subsidies should be provided such that GP visits are free ( 10 marks) ii. Discuss the market failure(s) that might support the imposition of some out of pocket payment by a patient ( 10 marks) (20 marks) (a) Some economists argue that government interference in market operations should be avoided as it will lead to distortions and sub-optimal outcomes. Using the concept of Pareto efficiency explain the rationale for their argument in the context of production, consumption and product-mix. Your answer should make use of appropriate diagrams and identify any underlying assumptions (HINT - Your answer should go further than just showing the equilibrium in a diagram. You should discuss why/how this equilibrium will be achieved. A good way to do this is to consider what happens outside of equilibrium) (30 marks) (b) Read the following statement and answer the question below: It has recently been reported that a greater number of general medical practitioners (GPs) are charging higher fees to patients. Some argue that this may lead to those who with lower incomes to be deterred from visiting their doctor. An alternative view is that being able to consult a doctor for free results in over consumption of medical services and large waiting times. i. Discuss the potential market failure(s) involved in the first argument that subsidies should be provided such that GP visits are free ( 10 marks) ii. Discuss the market failure(s) that might support the imposition of some out of pocket payment by a patient ( 10 marks) (20 marks)