Market Failure

Question 1

What is market failure?

Answer 1

When market is unable to to allocate scarce resources efficiently to meet the needs of society

Question 2

What is externalities

Answer 2

Costs and benefits to third party as a result of the transactions in market

Question 3

Positive externalities

Answer 3

Benefits to the third party as a result of the activities of economic agents

Question 4

Negative externalities

Answer 4

Costs to third party as a result of the activities of economic agents

Question 5

Private benefit

Answer 5

The advantages a firm or an individual gain due to the economic activity

Question 6

Social benefit

Answer 6

Advantages to the society as a result of economic activity

Question 7

Private costs

Answer 7

Costs to an individual or a firm due to the economic activity

Question 8

Social costs

Answer 8

Costs to the society as a result of economic activity

Question 9

Private goods

Answer 9

When a good/service is avilable for a consumer only and is not available for cunsmption for anyone else

Question 10

Public good

Answer 10

Good that is non excludable and non rivalrous

Question 11

Public good

Answer 11

Good that is non excludable and non rivalrous