Module 3 Market Intervention- Vocab Flashcards
Cost-benefit analysis
The examination of the additional benefits to individuals compared to the additional costs from a rule or regulation.
Market failure
A situation where the individual pursuit of self-interest leads to results that harm the general public welfare.
Negative externality
Cost or harm imposed on a third-party as a result of an economic transaction in which they had no direct involvement.
Price ceiling
Law that keeps a price from rising above a certain level (the “ceiling”).
Price floor
The lowest legal price that can be paid.
Quota
A restriction that limits the number of goods that a can be bought and sold.
Regulation
The imposition of rules by government intended to modify the behavior of individuals to
improve productive and/or social efficiency
Shortage
The market situation that occurs when quantity demanded is greater than the quantity
supplied.
Surplus
The market situation that occurs when quantity demanded is less than the quantity supplied.
Social cost
The sum of the private costs resulting from a transaction and the costs imposed on consumers as a consequence of being exposed to the transaction for which they are not compensated or charged.
Social efficiency
The economic measure of efficiency that assesses an economy by its ability and organization to provide happiness and well-being for member of society.
