The fourth edition of this textbook has been substantially revised to reflect changing social problems as well as recent policy developments. It adopts a common approach to each social problem, asking what are the government's efficiency and equity objectives and looking at the extent to which they can be achieved through market-based or government interventions. The use of a simple yet rigorous economic framework makes this an essential introductory textbook for those with little experience of economics who are interested in how economic tools can be used to understand and shape public policy.