MICRO Market Failure Flashcards
1
Q
Market Failure
A
When the price mechanism fails to allocate scares resources efficiently; there is a net social loss.
2
Q
Complete Market Failure
A
When a market does not supply a good or service at all - “missing markets”
3
Q
Partial Market Failure
A
When a market produces the wrong quantity of a good or service, or at the wrong price.
4
Q
Causes of Market Failure
A
- Negative externalities
- Positive externalities
- Imperfect information/information failure
- Pure public goods (unprofitable for fm)
- Monopoly dominance
- Factor immobility
- Inequality
