SEE L2 Flashcards
1
Q
What if the “invisible hand” doesn’t work properly?
A
It results in
- Unmet social & environmental needs and neglected problems.
2
Q
Name 4 types of market failure
A
- Externalities
- Inappropriate government intervention
- Imperfect information
- Inefficient firms
2
Q
Explain externalities
A
When one party’s action makes another party better- or worse-off
3
Q
Give an example of inappropriate government intervention
A
Tax benefits to support oil companies
4
Q
Give an example of imperfect information
A
Electricity consumers at home lack information about different energy solution
5
Q
Give an example of inefficient firms
A
About 50% of all aluminum cans in the US are recycled (99% in Germany)
6
Q
Give examples of institutional voids
A
- Labor market voids (lacking education)
- Capital/Financial market voids (lack of financing opportunities)
- Product market voids (consumer lacking information and understanding of products)
7
Q
How do SEs transform problems into opportunities?
A
Respond to the institutional voids through innovative solutions
- Enabling value capture
