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8 Cards in this Set
- Front
- Back
When does a market fail? |
A market fails when it fails to allocate resources and doesn't resolve the economic problem |
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Efficiency |
Competetive Markets are considered to be efficient as they allocate resources according to consumer and producer signals |
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How to check if a market is efficient? |
Allocative efficiency shows if a market is efficient. This is when the market allocates resources when the consumer want/needs them. |
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Productively efficiency |
Firms in a market are productively efficient if they can produce their output at the lowest possible cost per unit |
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Type of Market Failures |
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Missing markets - Public Goods |
In a free market the good/service will not be provided e.g. street lights - can't stop other people consuming it |
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Missing markets -Private goods |
Can stop other people from consuming the product |
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Missing markets -Quasi Public Good |
Half qualities of public goods |