12.) Market Failure Flashcards
1
Q
What is an externality?
A
Any positive or negative effect that a market transaction imposes on a third party
2
Q
What is herd immunity?
A
The secondhand immunity that accrues to non-vaccinated people when other people are vaccinated. A positive externality
3
Q
What is a Pigouvian subsidy or tax?
A
A subsidy or tax designed to ‘internalise’ an externality by altering private costs and private benefits. Pigouvian subsidies encourage more consumption of goods with positive externalities, whereas Pigouvian taxes reduce consumption of goods with negative externalities.
4
Q
What is epidemiology?
A
The study of the pattern of disease spread
5
Q
Why do people change their demand for self-protection?
A
In response to disease prevalence and disease mortality
