Market Failure + Externalities

christian525
Mind Map by , created over 5 years ago

A Levels Economics (Unit 1 - Microeconomics) Mind Map on Market Failure + Externalities, created by christian525 on 04/09/2014.

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christian525
Created by christian525 over 5 years ago
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Market Failure + Externalities
1 Complete
1.1 missing markets
2 Partial
2.1 produces wrong quantity
2.2 wrong pricing
3 Causes of Market Failure
3.1 neg. externality
3.1.1 MSC exceeds MPC
3.2 pos. externalities
3.2.1 MSB exceeds MPB
3.3 Imperfect information
3.3.1 merit goods underproduced
3.3.2 demerit goods over-produced
3.4 market dominance by monopoly
3.4.1 leads to under-production and high prices
3.5 Factor immobility
3.5.1 causes unemployment
3.5.2 lower productive efficiency
4 Externalities
4.1 third party effects
4.2 occur outside market

Annotations:

  • i.e. people not directly involved in production or consumption
4.3 Positive
4.3.1 MSB > MPB
4.3.2 good underproduced
4.4 Negative
4.4.1 MSC > MPC
4.4.1.1 leads to overproduction
4.4.2 smoking
4.4.3 litter
4.4.4 food waste
4.4.5 pollution
4.4.5.1 impact on health

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