Market Failure And Misssing Markets Flashcards by User 4523 | Brainscape

Q

Signalling function

A

Supply

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Q

Incentive functions

A

Supply

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Q

Rationing functions

A

Demand

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Q

Allocative function

A

Demand and supply

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Q

What are the four functions of prices?

A

Signalling
Incentive
Rationing
Allocative

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Q

In order for public goods to be allocatively efficient they must be provided free at the point of consumption explain why ?

A

The marginal cost of a public good is zero
Therefore if the price has to match the marginal cost also has to be zero
Also free rider problem

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