Micro 3 Flashcards
1
Q
Market failure
A
When there is an inefficient allocation of resources in a free marker
2
Q
Private benefit
A
The benefit to the individual participating in the economic activity
3
Q
Private cost
A
The cost to the individual participating in the economic activity
4
Q
Social cost
A
The cost to society as a whole due to the economic activity
5
Q
Social benefit
A
The benefit to society as a whole due to the economic activity
6
Q
External cost
A
The cost to a third party not involved in the economic activity
7
Q
External benefit
A
The benefit to a third party not involved in the economic activity
8
Q
Social optimum position
A
Where social costs equal social benefits
9
Q
Externalities
A
The cost or benefit a third party who is not involved in the economic activity recieves
