Public Economics

Question 4 {40 marks) (a) 10 marks Health care expenditure accounts for a large proportion of government spending in GE CD countries. From a public economics perspective what is the justification for such expenditure? What are the benets of a publicly funded healthcare system? (b) 15 marks (i) From an economics perspective outline and explain two justifications for government intervention in insurance markets. You are required to provide a detailed explanation. (ii) Government intervention is always required in insurance markets to ensure an efficient outcome. Discuss and explain your answer. (c) 15 marks (i) Public goods are a form of market failure that (i) result in an inefficient outcome and (ii) can only be solved by government intervention. Discuss. Illustrate and explain your answer. (ii) What difficulties might governments face in determining the optimal level of provision of public goods? Why might public goods that generate positive net benefits for society not be provided by government. Explain using an example