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32 Cards in this Set
- Front
- Back
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What is non-excludability? |
The benefits of the good cannot be limited to those who pay for it. |
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What are free-riders? |
People who benefit but, don't pay |
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What is non-rivalry? |
Consumption of a good by one person does not reduce the amount available for consumption by another e.g. streetlights and roads |
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What is quasi-public goods (non-pure public goods)? |
A quasi-public good is a near-public good i.e. It has many but not all the characteristics of a public good |
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What is semi-non-excludable? |
It is possible but often difficult or expensive to exclude non-paying consumers e.g. fencing a park |
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What is semi-non-rival? |
When a good or service are open and available to the public and cannot be used up up to a certain point. E.g. when a beach becomes too crowded as do parks it is harder or impossible to find a spot to sit |
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What is market failure? |
Where the market leads to a misallocation of resources and an undesirable outcome for society |
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What factors could lead to a complete market failure? |
Public goods Merit/Demerit goods Externalities Asymmetric information Inequality Monopoly Immobility factors of production |
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How can a monopoly lead to a market failure? |
Lack of competition leading to a poorer outcomes for consumers |
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How can asymmetric information lead to a market failure? |
One party to a transaction can mislead another |
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How can public goods lead to a market failure? |
Completely failing to provide a good or service which is beneficial for society |
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What is immobility of factors of production lead to market failure? |
When it is difficult for resources such as labour to fill the needs created the market |
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How does inequality lead to market failure? |
Some people do not have enough money or resources to attain essential goods services |
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What are externalities? |
Negative/positive impacts on people other than the producer/consumer |
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What is a private good? |
A good look, such as an orange, that is excludable and rival |
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What is a public good? |
A good, such as a radio, that is non-excludable and non-rival |
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What is a missing market? |
A situation in which there is no market because the functions of prices have broken down |
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What are the functions of prices? |
Signalling Incentive Rationing Allocative |
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What is the incentive function of prices? |
Prices create incentives for people to alter their economic behaviour; for example, a higher price creates an incentive for firms to supply more of a good or service |
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What is the rationing function of prices? |
Rising prices ration demand for a product |
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What is the allocators function of prices? |
Changing relative prices allocate scarce resources away from markets exhibiting excess supply and into markets which there is excess demand |
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What is the signalling function of prices? |
Prices provide information to buyers and sellers |
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What is buffer stock? |
When you buy a product through the food years of production which can survive through the bad years keeping the prices stable |
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What are the functions of prices? |
The signalling function The incentive function The rationing function The allocative function |
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Give some examples of public goods
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National defence Police Street lights |
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What type of goods are most goods (private or public)? |
Most goods are private goods |
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What characteristics do private goods possess? |
Excludability Rivalry Rejectable |
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What is excludability? |
The owners can prevent people who haven't paid for the good from receiving its benefits e.g. a shopkeeper= |
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What is rivalry? |
If a good is consumed other people are unable to use it and gain its benefits e.g. a bar of chocolate |
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What is rejectable? |
If a good is being sold by a firm the consumer has the option not to by it. They can in fact reject it. |
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What characteristics does a private good possess? |
Non-excludability Non-rivalry Non-rejectable |
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What is asymmetric information? |
Where one firm has more or better information than the other firms selling their products. |
