1.3 - Market Failure Flashcards
1
Q
When are resources misallocated
A
When they are not devoted to the use that will give society the most welfare
2
Q
What is partial market failure
A
When the private sector may partially provide a good or service but at the wrong price of quantity
3
Q
What don’t buyers and producers consider when making decisions
A
Externalities
4
Q
What do negative externalities create for society
A
A deadweight welfare loss
5
Q
What does price signalling mean to buyers
A
Buyers assume price signals product quality
