Market Failure
Übersicht
Everything you have learned so far describes a market that works. Prices rise where goods are wanted, resources follow the prices, and nobody had to be told what to do. This lesson is about the cases where that machinery gets the answer wrong: where the market produces too much of something harmful, or too little of something valuable, and keeps doing so however long it is left alone.
You will learn what economists mean by market failure, why the phrase is about a misallocation of resources rather than about anyone going bankrupt, and how to separate a private cost from a social cost. You will meet externalities, the effects that spill over onto people who were never part of the transaction, in both their negative and positive forms. And you will work through what a government can actually do about it, which is the question the specimen paper devoted its entire second section to.
Ziele
- The meaning of market failure as misallocation of resources
- Implications of misallocation of resources
- Government intervention
- Externalities
- Defining externalities
- The difference between positive and negative externalities
Mindmap
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Lektionshinweis
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Unterrichtsbewertung
Herzlichen Glückwunsch zum Abschluss der Lektion über Market Failure. Jetzt, da Sie die wichtigsten Konzepte und Ideen erkundet haben,
Sie werden auf eine Mischung verschiedener Fragetypen stoßen, darunter Multiple-Choice-Fragen, Kurzantwortfragen und Aufsatzfragen. Jede Frage ist sorgfältig ausgearbeitet, um verschiedene Aspekte Ihres Wissens und Ihrer kritischen Denkfähigkeiten zu bewerten.
Nutzen Sie diesen Bewertungsteil als Gelegenheit, Ihr Verständnis des Themas zu festigen und Bereiche zu identifizieren, in denen Sie möglicherweise zusätzlichen Lernbedarf haben.
- Which of the following is an example of a negative externality? A. A firm creates pollution in the production process B. A firm makes a loss and closes down C. A firm pays its workers a low wage D. A firm raises the price of its product Answer: A
- Which statement correctly describes a positive externality? A. Private benefit is greater than social benefit B. Private cost is greater than social cost C. Social benefit is greater than private benefit D. Social cost is greater than social benefit Answer: C
- Consumption of healthy food creates positive externalities. Which policy is the most appropriate government response? A. A ban on healthy food advertising B. A subsidy for producers of healthy food C. An indirect tax on healthy food D. A tradable permit scheme for healthy food Answer: B
- A firm's private cost of production is $60 per unit and the external cost is $18 per unit. What is the social cost per unit? A. $18 B. $42 C. $60 D. $78 Answer: D
- Market failure is best described as which of the following? A. A business becoming bankrupt B. A misallocation of resources by the market C. A temporary shortage of a good D. Consumers being unable to afford a product Answer: B
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