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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

Efficiency

Competetive Markets are considered to be efficient as they allocate resources according to consumer and producer signals

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.

Productively efficiency

Firms in a market are productively efficient if they can produce their output at the lowest possible cost per unit

Type of Market Failures

  • Missing markets
  • Monopoly
  • Information failure
  • etc

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

Missing markets -Private goods

Can stop other people from consuming the product

Missing markets -Quasi Public Good

Half qualities of public goods