Market failure Flashcards
1
Q
Where can market failure arise (5)
A
Provision of goods and services e.g parks income distribution externalities abuse of market power e.g. monopolies economic instability
2
Q
What are the methods a government uses when intervening in a market
A
Price ceiling Price floor Taxes Subsidies Govt provision of good
3
Q
Why does market failure occur
A
The free market leads to unfavourable outcomes as it is based on the price mechanism - freely operating forces of supply and demand
4
Q
What are externalities
A
External costs and benefits private enterprise do not consider, e.g. noise or pollution
