Market Failure - Vocabulary

Question 1

What is market failure?

Answer 1

failure of markets to produce at a socially efficient level of output

Question 2

What are positive externalities?

Answer 2

beneficial effects that are enjoyed by a third part when a good or service is produced or consumed

Question 3

What are negative externalities?

Answer 3

the bad effects that are suffered by a third party when a good or service is produced or consumed

Question 4

What are public goods?

Answer 4

goods or services that would not be provided at all by the market

Question 5

What are merit goods?

Answer 5

goods or services that would be considered beneficial for people and that would be under - provided by the market and under consumed

Question 6

What are demerit goods?

Answer 6

goods or services considered to be harmful for people and that would be over provided by the market and over consumed