Markets Flashcards
what are the functions of price (3)
price as a ration
price as a signal
price as an incentive
what is market failure + partial and complete
market failure - a misallocation of resources by the free market
partial- when the market functions but is at disequilibrium
compete- when the market does not supply products (missing market)
what are public goods and the free rider problem
public goods- a good or service that is made available to all of society and is non excludable and non rivalrous
free rider problem is when individuals consume a good without paying
what is imperfect information
when one party to an economical transaction possesses greater material knowledge than the other
what is factor immobility
where factors of production are unable to move freely
what is monopoly power
where firms controlling the market raise prices to maximise profits
