limitations of markets (3.8) Flashcards
1
Q
what is an externality
A
an effect of an economy activity on a third party
2
Q
what is a negative externality
A
harmful effect of an economic activity on a third party
3
Q
what is a positive externality
A
beneficial effect of an economic activity on a third party
4
Q
what are the five policies the government use to correct negative and positive externalities
A
- taxation : eg. petrol tax
- subsidies : increase production of things w/positive ext
- state provision : NHS
- legislation and regulation : bans of harmful products
- information provision : educate the ppl eg. smoking
5
Q
what are state provisions
A
goods and services provided directly by the government
6
Q
what is legislation
A
laws to control the way people and organisations behave
7
Q
what is information provision
A
the government provides info to encourage ppl and organisations to change their behaviour
