Exam (elaborations)
ECS3704 Assignment 1 Semester 2 2024
- Course
- Public Economics (ECS3704)
- Institution
- University Of South Africa (Unisa)
QUESTIONS WITH ANSWERS ECS3704 Assignment 1 Semester 2 2024
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[Company name]ECS3704
Assignment 1
Semester 2
2024
QUESTIONS WITH ANSWERS
, ECS3704 Assignment 1 Semester 2 2024
Analyse with the aid of a diagram, why it may be necessary for government to intervene
in the case of pollution created by steel production. Using the same diagram, explain
the policy options at the disposal of government to address this issue.
1. Understanding the Problem:
• Pollution as a Negative Externality: Steel production often leads to pollution,
which is a negative externality because it imposes costs on society (such as
health issues and environmental degradation) that are not borne by the
producers.
• Market Failure: In a free market, firms only consider their private costs and
benefits, leading to overproduction of steel and excessive pollution. This results
in a welfare loss to society.
2. Diagram Preparation:
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