Partial Vs Complete Market Failure

Question 1

What is market failure

Answer 1

When the price mechanism leads to a misallocation of resources

Question 2

What are the 7 reasons for market failure?

Answer 2

1)externalities
2)public goods
3)information gaps/asymmetric information
4)merit and demerit goods
5)monopoly power
6)factor immobility
7)inequitable distribution of income and wealth

Question 3

What are the 3 market perfections?

Answer 3

1)information gaps
2)monopoly power
3)factor immobility

Question 4

What is complete market failure

Answer 4

When the market would not exist without government intervention. They are rare and are only seen with certain public goods

Question 5

What is partial market failure?

Answer 5

Partial market failure is when the market exists but does not work perfectly. This includes all other types of market failure:
Externalities
Some public goods
Merit and demerit goods
Inequitable distribution of income

Question 6

Which good is non-excludable and non-rival?

Answer 6

Public goods

Question 7

Types of factor immobility

Answer 7

1) geographical immobility
2)occupational immobility