Market Failure Chapter 18

Question 1

What is Market Failure?

Answer 1

Is when a market fails to produce and allocate scarce resources in the most efficient way

Question 2

What are Externalities?

Answer 2

Is when third parties are affected by the decisions and actions of others

Question 3

What is Complete Market Failure?

Answer 3

Is whe the market does not supply goods and services

Question 4

What is Partial Market Failure?

Answer 4

Is when either the wrong quantity is produced or the wrong price is charged

Question 5

Market Failure results in

Answer 5

Externalities

Question 6

What are Positive Externalities?

Answer 6

Is when a third party receives some benefit from a consumers economical choices

Question 7

What are Negative Externalities?

Answer 7

Is when a thrid party is negatively impacted by the consumers choices

Question 8

What are some Causes of Market Failure?

Answer 8

~ Monopolies
~ Negative Externalities
~ Positive Externalities
~ Imperfect Information
~ Published Goods

Question 9

What are some Remedies for Market Failure?

Answer 9

~ Taxation
~ Subsides
~ Legislation
~ Nationalisation