Flashcards

Market Failure Definitions

Jesse McNab Economics AS level Inglês 13 flashcards

Flashcards do conjunto (13)

1Market Failurewhen the market forces do not result in the efficient allocation of resources
2Market forcesthe forces of demand and supply
3Externalitiesaffect parties that are not directly involved in a transaction and may be either costs or benefits
4Private costsdirect costs to producers and consumers for producing and consuming a product
5External coststhe costs in excess of private costs that affect third parties who are not part of the transaction
6Social coststhe sum of private costs and external costs
7Private benefitsdirect benefits to producers and consumers for producing and consuming a product
8External benefitsbenefits in excess of private benefits which affect third parties who are not part of the transaction
9Social benefitsthe sum of private benefits and external benefits
10Public goodsggoods that are non-rivalrous and non-excludable
11Free rider problemthe problem that once a product is provided it is impossible to prevent people from using it and, therefore, impossible to charge for it
12Symmetric informationwhere both parties in a transaction have the same information
13Asymmetric informationwhere one party in a transaction has more or superior information compared to another