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7 Cards in this Set
- Front
- Back
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Market Failure |
The inability of the market to produce the quantity of the good that maximises society's welfare. |
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4 Areas That Cause Market Failure |
Provision of Public Goods Provision of Merit Goods Externalities Monopoly |
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Provision of Public Goods |
There is a market for public goods, yet no private firms are willing to supply these goods. |
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Provision of Merit Goods |
The socially desirable quantity of these goods is neither produced nor consumed, since there is underproduction & underconsumption. |
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Externalities: Positive & Negative |
Spillover effects of production and consumption. |
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Monopoly |
With monopolies, prices are higher & output is lower than if a number of firms were operating in that industry. |
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Causes of Market Failure |
Supply doesn't equal demand Inefficient use of Resources Overpriced Goods Inadequate Goods Leads to negative externalities |
