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Government intervención, James Navarro and Mario Ceballos - Coggle Diagram

- - - - a good that will be underprovided if the market were allowed to operate freely
  - - - Government will need to intervene further
        
        eliminate or reduce the shortages
        
        what to do?
        
        attempt to reach an equilibrium on the maximum price having as a result a shift on the demand curve to the left
        
        effect
        
        limit the consumption of the product
        
        shift the supply curve to the right until it reaches an equilibrium on the maximum price
        
        The government could offer subsidies to the firms in the industry to encourage them to produce more.
        
        The government could start to produce the product themselves, thus increasing the supply. This is known as direct provision.
        
        If the government had previously stored some of the product, then they could release some of the stocks (stored goods) onto the market . However, if the product were perishable , like bread, this would not be possible.
- - - - Such as agricultural products
    - - And avoiding equity issues
- - - - Alcohol
      - Cigarrettes