The economic problem of what to make and how to produce it would be left entirely to the market without government intervening at all, this is called " market failure. To help the government know which sector to give money to, they have the "budget" which is used to show the government's intentions and where they want to put their money. It is distributed each year in March by the Chancellor of the Exchequer, and the budget includes: how public spending will be financed, to change tax rates or introduce new ones, also to contribute to economic success such as growth and employment, and finally to influence spending on specific goods that affect the environment such as alcohol and cigarettes. However, there is a “budget deficit” when government spending is higher than the level of taxes and there is a “budget surplus” when the level of taxes is higher than the level of spending. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay Nevertheless, there are times when the government needs to intervene and one of them is “The Existence of Imperfect Markets”. there is little or no competition, which is bad for the economy because it thrives on rivalries. So the government intervenes when a business or corporation has enormous market power so that it can operate multiple businesses, which is an economic term called low concentration, meaning there are many businesses and “a high degree of concentration”. means the opposite, so that evens things out. Another reason why the government intervenes would be “the existence of externalities”. If someone's actions result in costs borne by other groups without compensation being paid, then an external/social cost has been generated. An example would be that the government would have to monitor the situation and if a company was emitting high levels of pollution they would be fined. Another reason would be that “the consumption of certain products is bad from a social point of view”. If something is bad for the environment, the government can start banning certain products such as medicines and display warnings on products such as cigarettes to show that they are harmful. Another reason would be to “provide goods of merit.” Examples of merit goods would be education and health services, some people do not think these services are worth saving money for or some people might be unable to pay for these services. This is where the government steps in and provides these services commonly referred to as “merit goods”. The government also intervenes "to provide public goods", again these are goods that even if they were useful to people they still wouldn't pay for them, so the government provides them and raises the price of taxes. The amount of spending on public goods will vary and be determined based on multiple factors such as circumstances and political views. Competition policy is primarily a means of promoting competition, attempting to improve the functioning of markets and making greater efforts to improve the efficiency of individual sectors. markets and increase rivalry between British companies within the European Union's single market. The government wants more competition, because if there is more competition, it will be more successful. The government also wants to prevent and reduce abuse of »..