1. Write a short essay on the nature and possible causes of Market Failure (or situations under which markets do not produce the ideal volume of output).
2. Write a short essay on externalities and the so-called Coase theorem. As part of your answer make sure that you discuss the circumstances under which private markets are most likely to come up with effective solutions to the problem of externalities.
3. With the aid of diagrams write a short essay comparing and contrasting the nature of the market demand for a private good with the nature of the market demand for a public good. In this context, discuss the problem of deciding on the optimal quantity of public goods provided.
4. Write a short essay explaining why, for some public goods, neither the private sector, nor the government are really capable of providing an optimal quantity of these goods.
5. With the aid of some examples, write a short essay on the so called ‘tragedy of the commons'.