Chapter 7 - Market Failure And Resource Allocation

Question 1

COSTS OR BENEFITS ASSOCIATED WITH THE PRODUCTION OR CONSUMPTION OF A GOOD OR SERVICE THAT FLOW ON TO PARTIES EXTERNAL TO THE MARKET TRANSACTION

Answer 1

SPILLOVERS OR EXTERNALITIES

Question 2

WHEN THOSE WHO DO NOT PAY FOR A PRODUCT ARE EXCLUDED FROM ITS BENEFIT

Answer 2

EXCLUSION PRINCIPLE

Question 3

GOODS AND SERVICES THAT ARE NOT PROVIDED BY THE MARKET SYSTEM, AS THEY ARE INDIVISIBLE AND OFTEN NOT BOUND BY THE EXCLUSION PRINCIPLE

Answer 3

PUBLIC GOODS

Question 4

GOODS AND SERVICES THAT ARE BOTH INDIVISIBLE AND NOT SUBJECT TO THE EXCLUSION PRINCIPLE

Answer 4

PURE PUBLIC GOODS

Question 5

WHEN PEOPLE CAN RECEIVE BENEFITS FROM THE CONSUMPTION OF A GOOD OR SERVICE WITHOUT CONTRIBUTING DIRECTLY TO ITS COSTS

Answer 5

FREE-RIDER PROBLEM