market failure

Question 1

when does market failure occur

Answer 1

when the free market alone fails to deliver an efficient allocation of resources

Question 2

define complete missing market

Answer 2

a situation in which there’s no market because the functions of price have broken down

Question 3

define partial missing market failure

Answer 3

when the free market would provide levels of goods and services but not to the socially optimal level

Question 4

causes of market failure

Answer 4

positive and negative externalities
public goods
inequalities in the distribution of income and wealth

Question 5

define public goods

Answer 5

a good that possesses the characteristics of non-excludabilitly non-rivalry in consumption and is non rejectable.

Question 6

define non rejectable

Answer 6

if a public good is provided we can avoid it

Question 7

define non excludable

Answer 7

once provided no person can be excluded from benefiting

Question 8

define non rivalry

Answer 8

consumption of the good by one person does not reduce the amount of available for consumption by another person

Question 9

give an example of a pure public good

Answer 9

street lights

Question 10

what is a private good

Answer 10

rejectable excludable and rival

Question 11

define quasi public good

Answer 11

has one or two of the features of a public good