Market failure causes Flashcards
1
Q
What is Market failure ?
A
Free market fails to allocate scarce resources at the socially optimum level
2
Q
How do +ve/-ve Externalities cause MF ?
A
Self Interest
3
Q
How do De-Merit / Merit Goods cause MF ?
A
Information Failure
4
Q
How do Public Goods cause MF ?
A
Free-rider problem
5
Q
How do Common Access Resources cause MF ?
A
Self-interest , over production
6
Q
How does Income Inequality cause MF ?
A
Inequity
7
Q
How does Monopoly Power cause MF ?
A
High Barrier to entry
8
Q
How does Labour Immobility cause MF ?
A
Occupationally immobile/ Geographically immobile
