markets micro Flashcards
1
Q
What is allocative efficiency
A
consumer satisfaction is maximised in the production of goods and services
2
Q
What is economic efficiency
A
occurs where we have allocative and productive efficiency at the same time
3
Q
What is an indirect tax
A
Tax on goods and services
4
Q
What is VAT
A
Ad Valorem tax is a tax which increases in proportion to the value of the product
5
Q
Taxation
A
medium through which governments finance their spending and control the economy
6
Q
Negative externalities
A
costs to a third party that are not included in the price of the economic activity
7
Q
Causes of market failure
A
Externalities
Missing Markets
Under-provision of public goods
Information gaps
8
Q
Why may some goods be public
A
Might not be a cost-efficient way of pricing the good
