Competitive Markets and Externalities  1.What impact do policy interventions have on the supply and demand equilibrium for a product? Provide specific examples 2.What are the determinants of price elasticity of demand? Identify at least three examples? 3.Explain how price elasticity can impact pricing decisions and total revenue of the firm? 4.can policy market interventions cause consumer or producer surplus? Explain why using specific reasoning

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Market Failure Analysis

To understand Market failure, we need to first understand welfare economics. An Italian economist, Vilfredo Pareto stated that allocation of resources in an efficient manner such that an economic change, which harms no one and makes someone better off, indicates an increase in social welfare. It is also called Pareto Optimality, where resources cannot further be reallocated without harming one. This does not apply to those economic changes, which harm some and benefit others. social welfare increases if the utility of any of its members' increases and none decrease in the economy.