ECS3704 ASSIGNMNET 04 SEMESTER 2 2024

ECS3704


ASSIGNMNET 04 SEMESTER 2 2024


STUDENT NO:




ECS3704
ASSIGNMNET 04 SEMESTER 2 2024

, ECS3704 ASSIGNMNET 04




Government Intervention in Steel Production Pollution: Analysis and Policy Options



Introduction

The production of steel is essential for economic development, but it is also a

significant source of environmental pollution. This pollution can negatively impact

public health, the environment, and overall quality of life. Governments often need to

intervene to address these externalities that market mechanisms alone fail to

regulate.



Diagram Analysis



Figure 1: Market with Externalities



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Please replace it with an actual diagram as needed.]



1. Supply and Demand: The intersection of the supply and demand curves (D1 and

S1) indicates the equilibrium price (P1) and quantity (Q1) of steel produced in a free

market.



2. Social Costs* The actual social cost of steel production (S2) exceeds the private

cost (S1) due to the negative externalities of pollution. The distance between S1 and

S2 illustrates the extent of social costs that are not reflected in the market price.