Evaluate the case for and against leaving market forces to provide necessity goods such as water

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Using the video and your own economic knowledge, evaluate the case for and against leaving market forces to provide necessity goods such as water’ Leaving necessity goods to the market is problematic. Market failure is a situation where there is misallocation of resources in the market. This situation can be seen in Karachi, Pakistan. A very system of distributing water in the city has resulted in extreme water shortages, causing a humanitarian crisis. Water, being a necessity good, has very inelastic demand, which means that regardless of the price of water, demand will not change, which will cause excess demand if the good is not supplied enough, which is the case with water in Karachi. The inefficiency of the government to provide water has caused the development of black markets, which further enforces inequality and inequity among the poor population of Karachi. Leaving the government to provide necessity goods is arguably more inefficient than if left to the market. The government, in providing the necessity goods,
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has no incentive to maximize the efficiency and quality of the system. As the government receives no profit from the distribution of necessity goods, there is no pressure upon it to improve the quality of the distribution. No matter how efficient and good the distribution is, the government employees in charge of the distribution will be payed the same amount, and the department of government responsible for the necessity good does not face the threat of bankruptcy in case they do a bad job, thus it does not incentivize its employees to do a good job. Furthermore, a corrupt government ...

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