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(a)Explain why market failure arises. (b) Discuss the problems that asymmetric information can lead to in the market, and how businesses and individuals try to

(a)Explain why market failure arises.

(b) Discuss the problems that asymmetric information can lead to in the market, and how businesses and individuals try to solve for this problem.

(c) Explain, using a relevant graph, how a carbon tax might reduce a negative production externality and lead to a more socially efficient output level. Discuss any alternative policies that could be used to achieve this.

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