How can government intervention, such as taxes and price controls, address market failures while maintaining market efficiency?

Government intervention can help fix problems in the market, known as market failures, which occur when the free market does not allocate resources efficiently. For example, when a company pollutes the environment, it may not pay for the damage it causes, leading to over-pollution. In this case, the government can impose taxes on the polluter, making them pay for the harm they create, which encourages them to reduce pollution and helps protect the environment. Additionally, price controls, like setting a maximum price for essential goods, can prevent shortages and ensure that everyone can afford basic necessities. By using these tools wisely, the government can help make the market fairer while still allowing it to function effectively.