Discuss how externalities may prevent market equilibrium

Question

Markets and the Economics of the Public Sector

You have been assigned to a team that has the responsibility of preparing a paper consisting of 1,750 words for the governor's next economic conference. Your paper should address the following:

• Explain why equilibrium of supply and demand is desirable.

• Explain the following concepts using the concept of consumer and producer surplus:

• Efficiency of markets

• Costs of taxation

• Benefits of international trade

• Discuss how externalities may prevent market equilibrium and the various governments policies used to remedy the inefficiencies in markets caused