Significantly the government intervenes in the market

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related to market failure. Significantly, the government intervenes in the market when there are cases of inefficient allocation of resources. Equally, it intervenes to combat inequities in the
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Surname 3 market through subsidies, taxation, and regulation. Correspondingly, the involvement is aimed at promoting general economic fairness in the markets and maximizes social welfare. Moreover, the government intervenes through taxation of harmful products; thus discourage their consumption. The government influences the demand for cigarettes in multiple ways other than through taxation (Office of Fair Trading). For instance, it calls for cigarettes to be packed inside closed packets or covers; hence making it less enticing and hard for people to purchase. Furthermore, taxing the products raises the government revenue, which is used in the growth of the economy. Additionally, policy intervention by the government help in correcting market failures; thus leading to the achievement of equality in income and wealth distribution. Disadvantages of Government Intervention On the other hand, government participation through taxation is associated with multiple problems. Imposing taxes on products increase the prices for the buyers, which leads to reduced demand for the product causing it to be inelastic. Similarly, through intervention through
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