1.3 - Market Failure Flashcards
1
Q
What is market success
A
When marginal cost is equal to marginal utility - equilibrium
2
Q
Definition of marker failure
A
Free market leads to a misallocation of resources
3
Q
What’s an externality
A
an impact on a 3rd party from the consumption or production of a product
4
Q
What are private costs
A
Costs to firms of production
5
Q
What are private benefits
A
Benefit to consumers
6
Q
What’s a negative externality
A
Negative affect on a 3rd party from consumption or production
7
Q
What’s a positive externality
A
positive affect on a 3rd party from consumption or production
8
Q
A
