Bankruptcy Protection

For example, when a manufacturing plant produces vesicatory fumes that spread throughout its vicinity via the wind, such loathsome air might impair the health of many people, peremptory sizable medical cost on them. The mining constancy provides another example; the extraction of minerals might scar the stain near the mine or quarry, whose cost again is not directly accounted for in the free market. Agricultural examples arise in such instances as farmers using chemical pesticides that might visit external cost on neighbors if rain results in outpouring on surrounding land, or if the runoff seeps into the ground slacken and pollutes the water for human or animal consumption. Even flying food restaurants impose external cost in the moxie that the countless wrappers, cups, and other containers given to customers require an inordinate tot up of space in local trash dumps, and the cost of this governance is placed on taxpayers. Airlines and airports also impose external costs on those who live under flight patterns in equipment casualty of excessive noise, which tends to lower property values. Thus, external costs atomic number 18 quite common in the American economy today.

In summary, an unrestricted free market tends to produce too frequently of a bully or service when external costs ar present (Byrns 1987). The presence of the latter tends to distort prices and costs and suboptimizes economic activity from a societal viewpoint. Government practically tries to ameliorate such imbalances through regulation, t

Stiglitz, J. (1990). Economics of the public sector. NY: Norton.

Pure monopolies are relatively rare, nevertheless they do exist (Byrns, 1987). Local electrical, gas, and water utilities are good examples, since they produce a product for which there are no close substitutes. But a firm's degree of monopoly may diversify among markets. For instance, the electric company has a monopoly in the production of electrical energy for lighting purposes, but for heating its product may struggle with gas, coal, and fuel oil sold by other firms. An electric company may consequently be a 'pure monopoly' in the lighting market, but a partial one in the heating market.

Similarly, railroads, buses, taxis, and airlines are not pure monopolies, but they are partial ones depending on the extent to which buyers can substitute the products/ operate of such industries in meeting their transportation needs.

Health dish out illustrates an area where the free market does not function as it should (Stiglitz, 1990). Demand is relatively inelastic, especially when one is ill or injured. For example, if a person is in pain or has a serious illness, he or she cannot shop around for the lift out deal (as opposed to the purchase of many other service or goods). Such a long-suffering must go to the first health provider available, regardless of price. Furthermore, the price is essentially unknown until the problem is diagnosed and treated -- only after this does the patient get a bill. In addition, with medical insurance paying(a) for health services of about four-fifths of the American population, the incentive to light upon the best price and service is mitigated. Also, advertising among doctors, particularly related to price, is still generally prohibited, which minimizes the flow of such useful tuition to the consumer. Finally, the proliferation of malpractice lawsuits has markedly raised insurance costs for medical providers, as well as causing them to practice "defensive medicate" with redundant procedures, both
Order your essay at Orderessay and get a 100% original and high-quality custom paper within the required time frame.