Sunday, December 07, 2008

Unit 1: Government action to overcome market failure: Cocaine use

The BBC reports the launch of a hard hitting campaign to reduce cocaine use

http://news.bbc.co.uk/1/hi/health/7762750.stm

a) Why type of market failure does cocaine use represent? Explain your reasoning
b) What are the private costs of cocaine use?
c) What are the external costs of cocaine use?
d) Using a diagram, explain how there is market failure in the cocaine market
e) To what extent do you believe this campaign will reduce the market failure associated with cocaine use?

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