Sunday, February 03, 2008

Unit 2 : Information failure and government action

The BBC reports that the Health Secretary Alan Johnson is to call this week for fluoride to be added to Britain's water supplies.

http://news.bbc.co.uk/1/hi/health/7224743.stm

a) Why is fluoride underconsumed in the free market?
b) What type of market failure is therefore present?
c) Why is the government proposing this action?
d) To what extent do you think the government legislation is likely to reduce the market failure?

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