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15 Cards in this Set
- Front
- Back
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Market failure
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Where market outcomes lead to major problems for society, usually inefficiency (
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Cobweb theory
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Theory explaining fluctuations in market price and quantity over time
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Minimum price (price floor)
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A guaranteed price at which producers can sell their output
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Maximum price (price ceiling)
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Price above which producers or consumers cannot legally trade
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Buffer stock scheme
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Scheme to maintain market price received by producers between a minimum price and maximum price
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Government failure
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Where government intervention causes inefficiency in resource allocation
(Information failure, distorting market by price controls, imposing administrative costs) |
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Common agricultural policy (CAP)
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European Union programme to intervene in the agriculture market to support the welfare of European farmers
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Tariff
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Tax levied on an import
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Economy of scale
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The gains in efficiency (fall in unit costs) from expanding the scale of production
(5 types; technical, bulk buying, financial, risk-spreading, specialisation) |
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Monopoly
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A firm with 25% or more of the market share in a particular market or industry
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Merit good
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A good which consumers under consume at market prices because they underestimate the long term benefits to themselves
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Merit good
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A good which consumers under consume market prices because they underestimate the long term benefits to themselves
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Demerit good
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A good which consumers over consume at market prices because they underestimate the long term harm to themselves
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Negative externality
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A side effect of a market activity which harms third parties without compensation
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Positive externality
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A side effect of a market activity which benefits third parties without them having to pay
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