There is market failure due to overconsumption in the free market. There is overconsumption as in the free market it ignores the negative externalities; for example the long term dangers of alcohol. So, people are mis-informed. The private benefits of consumption are greater than the social benefits of consumption therefore, as drunken individuals can cause other sober individuals to feel uncomfortable while on the streets.

Government Intervention

One possible type of government intervention would be to force a tax on alcoholic drinks. This would cause the price of Alcoholic drinks to rise, as the cost of production to produce alcohol would rise, so supply would decrease and shift to the left on the supply curve. This would mean there would be excess demand and so this would be a signal to producers to raise the price to meet the new market equilibrium. So, the government would hope that by the price increasing, it will reduce the demand and also overconsumption. Another possible type of intervention would be for the government to provide workshops of some sort to children to tell them about the long term negatives of alcohol. If they are told about the negatives at an early age then they are less likely to over consume alcohol when they are old enough to drink. So, it was reduce the overconsumption of alcohol.

By - Harpal Sidhu

There is market failure because if left to the free market there would be under-consumption. This is due to the missing information as consumers are not fully aware of the private benefits and thus would ignore the external benefits (the third-party) as consumers are driven by self-interest. Consumers are unaware of the social benefits in the long term of excercising which is unlikely to be recognised at the point of consumption so the positive externalities are not taken into account resulting in misallocation of resources because there would be under-consumption of the product.

Government Intervention

The government intervenes the free market by having children to do at least 2 hours of sports a week in schools. As well as this, the government also intervenes by providing subsidies to the free market. So there are free gyms in parks to make consumers aware of the opportunity to do excercise and stay healthy without having to pay, thus also prevent market failure. The government also reduce monthly fees at the gym to encourage consumers to use them to improve their healthy lifestyle and thus prevent market failure. Moreover charities also organise mile runs in order to raise funds, and therefore this encourages consumers to help others and themselves, which would also prevent market failure.

Therefore the government prevents consumers under-consuming the product and in the long run, be able to recognise the social benefits of this merit good.

By Vinita Raichande

If left to the free market these would be over consumed as
consumers only take into account the private benefits of consuming the drinks and ignore the external costs such as the health risks the NHS would have to deal with and another external cost is obesity. The benefits to society are less than the benefits to the individual so these negative externalities are produced. Also there are may be information failures meaning the consumers don’t know about the long term
costs of consuming this demerit good.

Government Intervention

One way in which the government could intervene is by imposing a tax on the sugary drinks. This higher price will reduce demand for the sugary drinks and make healthier alternatives more appealing which will also tackle the problem of obesity. Another way the government could intervene is by having schools emphasise the effects and risks of consuming too much of these sugary drinks by having specialists come in and talk in assemblies for example. Also the government could start putting health warnings on fizzy drink packaging like it is done on cigarette pacaging to inform consumers of the dangers of consuming too much of these drinks.

If the government was to intervene in these ways, it would
prevent the overconsumption of this demerit good.

By Saadiya Ibrahim

Overconsumption in the free market causes there to be market failure. The overconsumption is mainly due to information failure in which consumers are not fully aware of the long term impacts of smoking on themselves and others. In the free market, consumers only consider the private benefits and not the external costs/benefits. For example if a consumer was to get lung cancer, they most likely would not have considered the costs which would be faced by the health services. Consumption of tobacco can also be harmful to the people around the smoker and this can be seen as rather selfish as the smoker has not taken into account, the effects smoking can have on others due to the effects of passive smoking; this is another example of information failure.

Government intervention

The government has intervened the free market by banning any smoking related advertising from the TV and other media. Also the fact that they have enforced taxes on cigarettes/ tobacco has caused there to be an inward shift in demand. This is as the law of demand states that a rise in price leads to a fall in demand.  The government has also funded numerous anti smoking campaigns to encourage people to change their attitudes and behaviour towards smoking. For example, some of the campaigns aims are to stop young people take up smoking and also to encourage smokers to try and quit. Also from around May next year, only plain designs will be used on cigarette packets. This is as they will look far less appealing and therefore reduce the amount of new smokers.

Gambling is a demerit good, therefore if left to the free market it will be over consumed. This may be due to a lack of information, causing consumers to only focus on the private benefits and therefore ignoring the negative externaties consumption will have on third parties. Consumers may be unaware that taking part in gambling may cause problems in the future, such as physiological harm and addiction; factors that can lead to family problems which will be faced by the third party.

Government intervention

Governments can intervene on the free market by placing a minimum age restriction (18 or 21) on casinos, to prevent people from gambling. They can also intervene by enforcing schools to teach kids about the risks of gambling. They could also put a parental lock on gambling websites to stop children from taking part in online games

Amar Sakaria

In the free market, information failure causes there to be under consumption of people visiting museums. This is as people are unaware of the private benefits such as the extra information and knowledge they will gain on something.

Government intervention

The government has intervened by subsidising museums. This is useful as for example some of the money can go towards advertising which can in turn help attract more consumers. Also they now provide free access to national museums and galleries which has been put in place in order to attract more visitors. This is due to the fact that lower prices create an increase in demand and this subsequently increases the amount of consumption. Also the government is continuing to fund the renewal of older displays which is a brilliant idea as it means that consumers may constantly visit a museum as there will be something new and different each time, therefore expanding the consumers knowledge which is an outstanding private benefit.

-Irfaan

In the free marker imperfect information leads to the under consumption of student studying at school. This may be because students are put off due to the private costs now and do not know the private benefits as they come in the future. Also, there is under production as firms cannot make profit from this.

Government intervention:

The government has to intervene to correct the market failure and to improve the performance of the economy. The government intervenes by providing subsidies to education. As a result this leads to a greater output by the school. They can invest this money in better education and so attract young children to go school. In addition, there are external benefits such reducing unemployment.

However, if it was left to the free market, merit goods such as education will be under consumed and produced.

-Miron

In the free market, illegal drugs are over consumed because of information failure which is when consumers are given incomplete/inaccurate data. As a result, consumers are not fully aware of the negative impacts on their health from consumption. This causes consumers to only acknowledge the private benefits thus ignoring the negative externalities faced by third parties and society. For example if a consumer was under the influence of an illegal drugs and crashed a car, they would not have taken in to account the costs faced by the health service and potentially the problems faced by their family

Government intervention

The government has intervened in this market by enforcing legislations and bans for example the misuse of drugs act which consists of penalties like a fine & a prison sentence. 

Also, the government has enforced schools to educate children about the effects & punishments of consuming or having possession of an illegal drug.

Another way, the government has intervened in this market is by having heavy taxes on drugs. As a result their is a decrease in demand due to prices being at a point beyond the reach of many people

By Chandrakant Magan

Governments Intervention

Government would try intervene and try tax the pollution caused. They also may enforce laws such as The Clean Air Act (1956-1968), Which prohibits the emissions prohibits emissions of smoke within smoke control areas, unless using an exempted appliance or an authorised fuel. They also may use incentives such as subsidies as this may raise output. It acts as an incentive as firms will start to develop cleaner production and therefore pollute less.

Deepa Mistry

Government Intervention:

There is information failure as to the health risks, addictiveness and external costs of consuming cigarettes. So the government intervenes to fix this. They do this by educating children on the external costs and health risks by perhaps funding drug education in schools. They also make it illegal to smoke/buy cigarettes if you're under 18 and to smoke in a car with a person under the age of 18. It is also illegal to smoke in a public place and they can enforce the use of health warning labels on cigarette packets.

- Amber Patel

Museums are classed as merit goods as they have private benefits and if left to the free market, the goods are under-consumed which produces positive externalities of consumption (Social benefits to society are greater than the private benefits).

Government Intervention to correct Market Failure.

The UK government takes action on this market failure and ensures there is correct information displayed regarding the full social benefits of Museums to society. One way in which the government steps in is by making museum visits compulsory throughout education. This would lead to an increase in the consumption/demand of museums. In addition, the government intervenes by providing subsidies to museums. Therefore, the museums are able to develop their research and development. They can achieve this by enhancing their exhibitions which would attract more people to go and visit the museum or go back again.

Vinay Desai

In a free market for alcohol the consumer will only take into account the private benefits for consumption for example the consumer will be more sociable. However the social benefits for any third party are far less than the private benefits, and this means there is over consumption and therefore miss allocation of resources. Furthermore alcohol has negative externalies which the consumer does not take into account, this can be anything like the cost to the NHS for treatment for the individual drinking alcohol due to drinking related injuries. This all results in too much demand, and is the reason why alcohol causes market failure.

Government Intervention:

Due to the miss allocation of resources the Government must step in to correct the market failure. There are multiple ways that the Government does this one being legislation. There are laws in place to reduce the negative externalities and consumption of alcohol. One law is that is it illegal to sell alcohol to someone under the age of 18, and it is also illegal to buy alcohol for someone under the age of 18. This is effective as it reduces the number of younger people drinking alcohol, reducing consumption. Another law is that it is illegal to drink and drive, the actual limit is 35 micrograms of alcohol in 100 ml of breath. This is an effective law as it reduces the negative externalities of drink driving e.g. the NHS cost if there is a crash. Arguably this is not very effective as drink driving still happens due to information failure as the consumer may believe there are under the limit when the start driving.

Another intervention is the awareness of alcohol and its problems especially in schools. One awareness campaign is a company called D.A.R.E - Drug Abuse Resistance Education. This campaign receives funding from a range of sources one being the Government. This covers a whole ranges of demerit goods including alcohol. You learn about its effects and even give a performance on what you have learned to your peers and family and afterwards you receive a certificate of graduation. This is just one of many ways the Government has stepped in to make the problems of alcohol more aware to young people in the hope that they will not over consume alcohol, to prevent many negative externalities.

-Alistair Carson

-Seb Squires

Why market failure?

In a free market, where the prices for goods and services are determined only by their supply and demand for them and government intervention is limited, the government feels as though merit goods would be under-produced and under-consumed due to a failure of information to consumers. Thus education is viewed as a merit good and an example of partial market failure – the free market will lead to a provision of a product, but in the wrong quantity, leading to a misallocation of resources.

Consumers may be unaware of and underestimate the full longer term benefits that they may derive from an education. The private costs of an education must be paid now but the private benefits, for example an increased earning potential for the consumer, will take a period of time to emerge. The free market may fail to consider many external benefits as a result of education, including rising incomes and productivity for future generations, an increase in the occupational mobility of a labour force which may help to reduce unemployment, the encouragement of a more socially cohesive society and a higher level of equality and opportunity.

How does the government intervene?

Clearly the government must intervene in education due to the occurrence of a partial market failure. This intervention is achieved by subsiding education facilities in order to ensure uniform cost and quality of education for all income classes. Additionally, by law children and young people must be in education between the ages of 5 and 18, which in turn should increase their earning potential in future. To heighten this, the government have recently altered the grading systems for examinations to be sat in the future, for example GCSEs will not longer be graded from A* to U, rather 9-1. It is hoped that this method will encourage students to push themselves further, resulting in equality in job opportunities for future generations.

Market failure occurs when the market simply doesn't supply a good or service to consumers, hence a 'missing market', leading to supply not meeting demand. Education is a good or service that is under-consumed due to information failure and therefore the provision, if left to the free market would be less. In other words, this is seen as a merit good as consumers not having much knowledge about the benefits of the service and being aware of the good effects it has in the long run, consumption if not provided by the government would be low. Education also has positive externalities in consumption, which shows an increase in demand for the service when accounting not only the private costs but the external benefits of consuming the good too. Demand, if taking into mind only the private benefits would be low, however when taking into account the external benefits, demand for the service increases as the consumers would be aware of the advantages of the service. However, consumers only under-consume this good due to them not being aware of the external benefits, such as a higher income in the future, a better job, thus leading to a better quality of life.

Government intervention

The government intervene by providing the market of education to consumers making sure that the consumers don't miss out, as no intervention by the government would lead to a missing market. This is done by the provision of state schools so that citizens are able to obtain the service with affordability therefore not missing out. In addition, another participation by the government in this market is making children legally obliged to attend school and get educated, leading to a more higher welfare for them in the future as they would be more able to obtain higher paying jobs.

Shivam Raja!!

A demerit good is something that is over-consumed and is usually considered a 'bad' good. The reason the product is over-consumed is a result of information failure, whereby the firm who produces these bad products fail to give out all the information on the negatives on the product. Smoking is a good example of this because most people who smoke cigarettes tend to not understand the long term consequences of smoking. Therefore the product is over-consumed and over-produced. This is market failure as it shows negative externalities in consumption, so if left to the free market the demand of these products would be high and the demand would not meet supply so the government would have to intervene in order to reduce demand by showing the negative externalities.

How do the government intervene?

1) The government has placed an age limit on when you can buy and smoke cigarettes.

2) Indirect tax is placed on the product in order to make it more expensive and reduce the sales of the product.

3) Effective education is produced to students on the information that is failed to be produced by the firm on cigarettes giving them reasons on why they shouldn't be smoked. (For example, The Smoke Screen)

4) Images of effects on cigarettes are now produced on the packets themselves in order to show smokers what could happen as a result of smoking

5) Cigarette packets are soon going to be less colourful and appealing to the eye in order to stop them looking interesting to purchase.

By Kieran Purvis

In the free market drugs are over consumed due to information failure (the information is incorrect or ignored.) Some consumers are not aware of the impact consuming drugs can do. The person only accounts for the private benefit and ignores the negative externalities. An example would be if someone smoking around others the do not consider the health of others, as well as the cost to the health services.

Government intervention

1)The government has intervened by educating the public about health risks caused by consuming the drug. 

2)Also, the government have high duties on legal drugs which will slightly decrease demand as drugs are a inelastic good due to their addictive nature

3)There are laws which enforce penalties if illegal drugs are consumed. There are also laws to stop consumption of taking legal drugs as well. An example would be smoking in the car with children is banned.

By Jay Mandalia

Government intervention:

The government has intervened by providing museums with subsidies which allows them to develop and enhance their research to improve museums to make them more appealing to the public.

Also the education system ensures students visit museums as educational school trips to avoid information failure and so that they have the correct cultural information which will benefit them in the long run.

Many museums are free and have no entry fee. This means no one misses out and is deprived of museums. Those who are less well off still have the same opportunities as others when it comes to museums. This is due to the social benefits being greater than private benefits and so overall it is beneficial for society also.

Hassanali Daud

As a result of the positive externalities of cycling, the government takes many forms of intervention to maximise the consumption of the good i.e. to shift the quantity consumed towards the social optimum. One way the government intervenes is by allocating more funds towards creating a bicycle friendly transport system with safe bicycle lanes and reduced local speed limits. Between 2014 and 2015, over £77 million of total subsidies were given to UK cities to encourage use of National Parks and Cycling. This would in turn encourage more people to cycle and thus increase the demand for cycling as it would be safer than it currently is. Furthermore

in cities such as London, bicycle hire schemes have been introduced, e.g. the Santander Cycles Scheme in London (Introduced by Boris Johnson, Mayor of London City), where consumers can hire use of bicycles for as little as £2. This scheme has been made cheap and easy to use and has seen a significant 500% rise in the usage of this scheme since it was first introduced in 2010.

Cycling is a market failure because the government is required to take these actions for the quantity consumed of the good to reach the social optimum equilibrium. These government interventions of increased funding and improvement the ability to cycle on roads would cause an outwards shift in the demand as the total social benefits would now have been considered.

Milan Rajpara

The government must intervene to stop over-consumption. The government imposes heavy taxes on alcohol; this raises the price of alcohol and may discourage people from buying it reducing consumption. The government also provides education about alcohol to discourage people from drinking it. With education, people can learn the long term affects of alcohol and may not want to drink it. The government puts age restrictions on alcohol; this will deter people from drinking as it will be illegal to buy it and this will reduce consumption.

Manjot Singh

Demerit goods are goods that have negative externalities that exceed the private costs to the consumer. If left to the free market then these good would be over consumed and this overconsumption is what causes the market failure.

Government intervention

One of the main reasons that gambling is over consumed is because of information failure, the people gambling are misinformed of their chances of winning and believe they have a better chance than they actually do. This causes them to overconsume it and leads to market failure. To lower this, the government aims to educate everyone on the risks of gambling thus lowering the information failure as the consumers know what they are doing. They have also made sure the companies that are promoting gambling require licenses meaning only certain places can do it legally and not just a random person on the street. They have also kept an age limit on gambling where you can only buy and use lottery tickets, scratch cards etc when you are 16+ , this lowers the consumption and also means children don't misuse it before they are educated. Finally, for those who are already suffering from a gambling addiction , the government provide schemes such as gambleaware.com to help educate and change the ways of the addicted gamblers. All of this lowers the consumption of the product and therefore stops the market failure.

The governement do this because if left to the freemarket, they would only consider the private costs of the product meaning the freemarket equilibrium is much further up the supply curve than it should be. By intervening they bring the equilibrium more and more closer to the social optimum equilibrium which is the demand curve when social costs are taken into account and not just the private costs.

Shivam Chandarana

Government Intervention

The government intervene by increasing tax on alcohol which increases the price of the good and therefore the demand for the good decreases. Furthermore a person has to be 18 or over to buy alcohol which stops more people by alcohol. Also pubs close at a certain time which limits how people get alcohol.

TOM

The government have firstly put an age restriction (18) in order to prevent youngsters to be able to freely have access to this demerit good. Also one of the main reasons for market failure surrounding this demerit good is information failure. Due to this the government have helped to educate people on the harms of consuming this demerit good through the NHS and other government funded schemes. Schools also have to teach the harms and long term effects of consuming this good. Laws have been put in place to ensure that adults can not smoke in front of young kids in order to reduce the negative externalities produced from smoking. Tobbaco products are also banned from being advertised on TVs and most mainstream places in an attempt to reduce new people taking up the habbit. Finally all manufacturers of tobbaco products have to issue a health warning on them in a final attempt to help persuade people already caught in the filthy habit to try and quit.

MAP ✔

Therefore the government has to intervene to decrease overconsumption by impleting congestion charges in busy areas such as London and by making people pay road tax on all vehicles that produces pollution. This causes the quantity of cars demanded to fall and the price of cars to increase. You do not have to pay road tax on an electric car, thisgives people an incentive to buy electric cars as they get a private benefit of not paying road tax and they do not produce car pollution, benefiting society.

Jonathan Pantlin-Whyte

The government, therefore, have to intervene to make sure this doesn't happen, as this will lead to a market failure. Firstly, there are heavy taxes on gross profit (15%). Secondly, the government has placed age restrictions on gambling, to discourage young people from gambling. They also promote the true costs of gambling

- Adam Khalifa

The market fails because drugs are over-consumed if left to the free market. Drugs cause large negative externalities that the government is keen to avoid. The additional costs of drugs are: an increased burden on the NHS, increased crime and the fact that labour productivity is affected in a negative way, which is bad for the economy as a whole. The consumers take only private benefits into account, whilst ignoring the negative impact that illegal drugs have on individuals as a result of information failure. The social benefits and the benefits enjoyed by third parties are smaller than the private benefits. Also, consumers underestimate the long-term costs of drug consumption.

Government intervention:

The government has intervened by banning the consumption of drugs such as cocaine, heroine etc., which in theory has led to a decrease in the demand and over-consumption of illegal drugs. Futhermore, the government has intervened by creating anti-drug adverts e.g. Talk to Frank.

Patrycja Czupryniak

How do the government intervene?

The government has placed an age limit on when you can buy and smoke cigarettes also Indirect tax is placed on the product in order to make it more expensive and reduce the sales of the product.

Pictures of effects on cigarettes are now shown on the packets themselves in order to show smokers what could happen as a result of smoking also theres an idea that Cigarette packets are less colourful therefore being less attractive to customers resulting to less consumers of the product. 

By Mussa Lambat 

Alcohol is a demerit good because a demerit good is something that is over-consumed and bad’ for you.  Demerit goods, like alcohol and drugs etc, have negative externalities; the social costs to society are greater than the private costs faced by the consumer. Some of the negative externalities of alcohol are: anti-social behaviour like vandalism which leads to cost the taxpayers if someone gets arrested for antisocial behaviour, the taxpayers pay for the police and other emergency services. The market fails because alcohol would be over-consumed if left to the free market.

Government Intervention:

Firstly, the government made it illegal for anyone under the age of 18 to purchase alcohol so this therefore stops more people drinking it.

Secondly, there are heavy taxes on alcohol which increases the price and therefore decreases demand as some people won't be able to buy as much alcohol if they are on a lower income for example.

By Ryan Bradshaw

What have the government done?

-The government have introduced a law where smoking is not allowed in public places, this is not only to try help stop smoking but also to try protect the health of non-smokers.

-Another thing which the government have introduced is the health warning on packets of cigarettes, this is to try prevent people buying them because they may feel disgusted by them.

-Chay

In a free market consumers acknowledge the private benefit of driving but do not realise that there is also a greater social cost. This can lead to individuals only taking account of private benefits and not the social cost. This may be due to the lack of information as consumers may not know that they are actually contributing to pollution by a large amount and that there are better alternatives such as public transport. Moreover, it also could be due to the consumers' believing that the private benefits are greater than the social costs, for them personally. This means that car pollution is a negative externality of consumption.

Government intervention:

1) There are CO2 emission tests on vehicles to ensure they are within limits so that the vehicles do not contribute hugely to pollution.

2) The government has ensured that vehicles with a low CO2 emission rate have a low amount of road tax on them, e.g. the new Toyota Prius is exempt from road tax and the London congestion charge due to its low carbon emissions. This is a good way to navigate consumers into buying such cars which have low carbon emissions as they have such low road tax.

3) Public transport is subsidised and there are many offers such as the student yearly pass which is only £367 and can be much cheaper than dropping a pupil off by car. Also using a larger vehicle lowers the carbon emissions as others use less cars due to the increasing use of public transport.

- Raj Panchal

Alcohol is a demerit good as it is over consumed and it is seen as 'bad' for you. When consuming alcohol the social costs to society are greater than the private costs. It has a lot of negative externalities, some examples are anti-social behaviour, this effects other people so it is seen as a negative externality. Hospitals may be full of drunk people so this leaves less doctors to treat other people. There is also extra cost of policing and the consumers will be less productive in their jobs. Alcohol will be over consumed if left to the free market and this causes market failure as there is information failure.

The government has intervened by placing heavy taxes on alcohol, this raises the prices and therefor decreases demand. It will be not be affordable to those on low income. The government also educate people about the dangers of alcohol which may stop them from consuming it. They also put limits on consumption of alcohol when driving so less people are affected by drunk driving. There is also an age limit when purchasing alcohol. The government makes it illegal for anyone under the age of 18 to purchase alcohol so this stops some people from consuming it.

Umair Faizal

The government intervene in the market in order to correct the market failure. In this case the government inform the consumers about the health issues regarding smoking by writing it on cigarette packets and through information campaigns. The government also put it in place a minimum age consumption for demerit goods such as smoking

- Faatimah Umer

The government must intervene to stop over-consumption. They have put heavy taxes on alcohol as this raises the price of alcohol and may discourage people from buying it reducing consumption. The government also provides education about alcohol to discourage people from drinking it. With education, people can learn the long term affects of alcohol and may not want to drink it. The government puts age restrictions on alcohol; this will deter people from drinking as it will be illegal to buy it and this will reduce consumption.

If left to the free market, vaccinations would be under-consumed due to information failure, whereby the many benefits of having a vaccination and the many costs of not, are not fully known and taken into account by the person taking the vaccination. In the case of vaccinations, people mainly consider the private benefits alone, which include the obvious fact that they become less susceptible to disease and therefore are more likely to attend school/work to earn more income over their lifetime. However, vaccinations are a merit good, meaning that they have positive externalities in consumption, comprising of a reduction of the pressures and costs on the NHS (and therefore the Government) to deal with those affected by the disease, especially if there is a huge outbreak. They also have major benefits for the entire population that are sometimes overlooked because if enough people are vaccinated, even those who are not will receive a measure of protection. That is because, with only a few susceptible individuals, the transmission of the infection cannot be maintained and the disease spread. For example, childhood diseases like Smallpox that were commonplace less than a generation ago are now increasingly rare because of vaccines. The economic case for vaccinations, therefore, looks at least as strong as the medical one.

As a result of the positive externalities in consumption of vaccinations, spending on vaccination programmes appears to be a good social investment for the Government who take forms of intervention to maximise the consumption of vaccinations and therefore, shift the quantity consumed towards the social optimum equilibrium. One way that the government intervene is through educating young people about the benefits of vaccinations and the possible outcomes of not taking them. In addition to this, they are heavily encouraged to be taken before you go on holiday to prevent catching any diseases and spreading them back in the UK. Another example would be an 1853 law that required universal vaccination against Smallpox in England and Wales, with fines levied on people who did not comply. These interventions encourage more people to take vaccinations and hence, increase the demand for them.

Vaccinations are consequently an example of market failure because the government is required to take these measures for the quantity consumed of the service to reach the social optimum equilibrium. These government interventions cause an outwards shift in the demand for vaccinations as the total social benefits would have now been considered.

- Halima Patel

The government intervenes to stop over-consumption of these goods but putting heavy taxes,providing education and putting age restrictions .They have put taxes on alcohol as this raises the price of alcohol which may discourage people from buying it. Providing education about alcohol in schools might discourage younger people from drinking it. Education will also help people learn the long term affects of alcohol and may stop them from drinking it.Age restrictions on alcohol will  deter people from drinking as it will be illegal to buy it.

Sara Tracz

In a free market consumers innovate the private benefits of using a ‘Plastic bag” but do not realise that there is also a greater social cost, being the environment. This can lead to individuals only taking account of private benefits and not the social cost. This may be due to the lack of information as consumers may not know that they are actually contributing to pollution by a large amount and that there are better alternatives such as re-using bags.

However Demerit goods, especially plastic bags are associated with negative externalities, can be discouraged through taxation.Plastic bags are thought to pose an environmental menace, Although plastic bags make up a small amount of Britain’s litter, they can take 20 years to decompose fully, says Keep Britain Tidy. According to government estimates, cutting plastic-bag use by 60-80% might lead to a reduction of about 100,000 tonnes of carbon dioxide a year, equivalent to taking 35,000 cars off the road.
Governments have intervened by taxation via the “Plastic Bag Tax”: A tax on plastic bags in Wales has seen the number given away drop by sizeable amounts according to this news report Since October 2011, there has been a minimum charge of 5p on all single use carrier bags. The Welsh government acted in a bid to encourage re-use of bags and therefore lower demand for single-use free bags.

But has the government intervention led to an increase in crime? Tesco have resorted to putting security tags on their baskets after a surge in thefts following the new plastic bag charge. Greater Manchester branches of Tesco said a third of their baskets had been stolen in just a week.

Milanó Dayâl

Gambling is a demerit good because if it is left to the free market it would overconsumed and overproduced. This is due to people not being fully aware of the dangers of gambling, due to information failure. Gambling produces negative externalities in consumption and the social cost is greater than the private cost.

To counteract this, the government intervenes by placing age restrictions on gambling, and by imposing heavy tax.

André Finlayson

Aaliyah

If left to the free market firms would only take into account the private costs of smoking, they would not consider any negative externalites such as increased cost for the NHS, or even the health cost for those who don't smoke but are affected by ot through 'second hand smoke'. To stop this from occuring the goverment needs to intervene, and it does.

The goverment imposes heavy taxes and duties onto cigarettes, which act as a detriment to those who smoke, this means it is more expsensive to buy cigarettes which may make some people rethink their habbit.

Another way the goverment intervenes is that they offer many 'quit smoking' programmes through the NHS, this helps and guides those who wish to quit smoking for good!

My last example of goverment intervention is that they have now banned smoking inside a car with under 18s in it. This is mostly targeted at smokers with young children, and it means that the children will not suffer health-wise as there is no 'second hand smoking'

Jai Muru

The government intervenes by raising awareness regarding this issue through campaigns and educating children about healthy diets in school. Now, it seems, thanks to Jamie Oliver, they may even put a 10p tax on all sugary drinks - the higher price is hoped to make people choose healthier alternatives thus decrease demand.

- Saniya

-Sophie Whiting

Smoking is demerit good and is an example of a good that has information failure for the consumers and therefore leads to it being over consumed. 

After acknowledging private benefits aswell as external benefits it can be seen that demand decreases and therefore quantity demanded also decreases. This is because external benefits such as lung cancer and other long term costs of smoking leads to the consumers realising that the good does more bad than good.

What's governments intervention?

The government interviens by adding a huge amount of tax on smoking products to lead to higher prices and therefore be unappealing for consumers as they may not be able to afford it. Also age limit is added to prevent under age smoking. In addition they advertise non smoking and educate children about the negatives.

The government intervene in order to prevent market failure by placing things such as heavy taxes on the winnings of gamblers (15%) and also by placing a age restriction on it (18) and finally by publicizing gambling in a negative way. For those people who suffer from the addiction of gambling there are places such as gambling aware.com that allow people to turn there lives around.

The government do this because if left to them they would only consider the private costs meaning the the equilibrium would be much further up the supply curve than it should be. When taking into account the social costs this brings it down to the social optimum equilibrium by shifting the demand curve slightly.

Max Moulton 😄

To correct this market failure the government imposes taxes and duties on alcohol and because of this the demand curve will shift to the left ( due to the price of alcohol being more expensive) and the quantity will therefore be reduced and you will be at a point of social optimum equilibrium. However due to alcohol being a relatively inelastic good,putting a tax might not decrease the quantity demanded by much.

Another way the government corrects this market failure is by putting an age limit of 18 years old to alcohol over the counter and also advertising in schools about the dangers that alcohol can have on your body. With people having more understand of alcohol,information failure could be reduced within the public.

Lastly,the government has banned alcohol to be used in the advertising in sport.This why you no longer see the like of Heineken or Carlsburg on anything to do with football anymore.

Tino Zembe