(b) Using real-world examples, discuss how differing normative judgements can lead to different policy responses to market failure (such as negative externalities or the under-provision of merit goods).
Essay preview
Differing normative judgements often lead to different policy responses to market failure because economics can explain that a welfare loss exists, but it cannot by itself decide what governments ought to prioritise. Positive analysis may show that negative externalities such as pollution or smoking lead to overprodu