Micro and Macro Theory Application

2.3 Merit goods

These are commonly referred the as merit goods. If private sector can have a chance to open the hospital, it is will many illegal activities like illegal organ trade. Merit goods required by individual on a basis of need rather than make profit. Public goods are also provided by the government, because they would found that many people , even if they benefited from them, would refuse to pay.

2.4 Public goods

Public goods consumption is non-competitive and non-exclusive and cannot be provided by ordinary businesses and individuals. Profitability is hard to determine, and so is the target consumer. Benefit object is very wide, cannot charge. For example, fire, defense, water and electricity, these are public goods. The government provides public goods through taxation.Consumer can take advantage of public goods without contributing sufficiently to their creation, because consumers’ contributions will be very small but non-zero. Government will have to intervene to public goods which is available to all whether they pay or not. The government provides them and raises the fiance through taxation. The level of spending allocated to public goods and merit goods varies and will depend on many things such as needs and circumstances and political philosophies. Example of public goods such as fresh air, knowledge, lighthouses, national defence, flood control systems and street lighting.

3.Competition policy

UK Competition policy was introduced so that firms can compete with each other enabling consumers to get the best goods and services from the competing market. It was also introduced to enable markets to work better and achieve a good level of economic efficiency and welfare.The UK Competition policy provides an environment for competition to occur. It enables this in four ways; more efficiency for the economy, Lower prices for consumers, more