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21 Cards in this Set
- Front
- Back
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When is market failure said to exist |
When the market fails to deliver optimum economic efficiency |
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What is an externality |
when the people who make the economic decisions are not the ones impacted by them. Or the difference between private and social cost |
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Social cost |
all costs associated with transaction |
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Private cost |
the costs borne by the parties involved |
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Negative exeternality |
Private and Social costs that arise from a transaction such as pollution |
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Social benefit |
All Benefits that accrue from an economic decision |
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Private benefit |
only the benefits that are part of the transaction |
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Positive externality |
the social benefits exceed the private ones |
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Problems with negative externalities |
Inappropriate amount of the product being produced. The company does not have to pay for the social costs |
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Problems of positive externalities |
not enough being made social benefits aren't considered |
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Public goods - 3 characteristics |
non excludable non rivalrous non rejectable |
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What does non excludable mean |
impossible to control who's benefitting from the good
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What does non rivalrous mean |
one person using it does not stop others using it
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What does non rejectable |
People may not reject it |
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Problems Caused by public goods if not provided by state |
Market may fail to produce them at all After the first person has paid for it no one else needs to People will try and free ride as it is non excludable - no one pays for it |
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Failures in labour market |
Mobility of Labour |
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What are the 2 types of labour mobility |
Occupational mobility and geographical mobility |
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What is occupational mobility |
workers able to move quickly and easily from one occupation to another. |
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What is occupational immobility |
The inability to chance industries - not having the skills This is structural unemployment |
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What i geographical Mobility |
Labour should be able to move quickly and easily from one part of the country to another |
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What causes geographical immobility |
Family and social ties House prices |
