Explanation for distribution income

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Reference no: EM1311756

Discuss the reason why governments might want to intervene and how they might do- with respect to the following "problem" in the functioning of an otherwise perfectly-competitive ("pareto-efficient") economy:

1. The unequal distribution of income

2. "Breakdowns" in efficiency (i.e. lower real aggregate income than achievable) in the following areas:

a) "Imperfect" competition

b) Externalities

c) Lack of information (both relative and absolute)

Reference no: EM1311756

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