T- Meaning of MF Flashcards

1
Q

What is an externality

A

The affect to a third party

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2
Q

What is social benefit

A

Total beenfit to society

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3
Q

How to calcualte SB

A

MPB + MXB

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4
Q

How do you calculate social cost

A

MPC + MXC

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5
Q

What is social efficiency

A

When resourxes are utilised in the most efficent way (MSC = MSB)

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6
Q

What is a market failiure

A

When the price mechanism fails to allocate resources efficently

WHen the operation of market forces leads to a net social welfare loss

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7
Q

What inefficiencies are there in a MF

A

Allocative
Productive

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8
Q

What is a complete MF

A

When products are simply not supplied

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9
Q

What is a partial market failiure

A

When the makret does actually function but producuses at wrong price or quantity

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10
Q

What is amissing market

A

The failiure to produce goods and services despite them beign demanded

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11
Q

How can MF occur

A

Public goods
Inequality
Monopoly
Factor immobility
Agriculture
Cyclical Instability
Externalities
Demrit goods

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12
Q

Causes of MF

A

Productive and allocatiev inneffcienc
Monopoly Power
Missing markets (public goods)
Incomplete markets

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13
Q

What are incomplete markets

A

When only asmall amount fo demand is satisfied through elevls fo supply, causing the market to fail to develop fully

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14
Q

Talk about property rights and market failiures

A

When property rights are nto clearly defined, leading to oc of goods etc etc

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15
Q

how does ineffcienies cause mf

A

prices to high

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16
Q

how can monopoly power cause mf

A

undcosnumption fo goods at too high price

17
Q

how do public goods lead to mf

A

firms have no icnetive to provide good, underconsumed, market failiure

18
Q

how do incomplete markets lead to mf

A

too much or too little fo a good is produced, at the wrong price

19
Q

acronym to remeber types of mf

20
Q

hwo is inqeuqality a type fo MF

A

due to it being ufnair, people cant get shit

21
Q

how si agriculture a type of MF

A

Volitile prices on merit goods
Envriomental costs, negative externalities
Monospony power

22
Q

how does cyclical instabiliyt cause mf

A

high prices due to ifnaltion, etc
leadign to uc of merit goods say

23
Q

How does externalities cause MF

A

Wont be accoutned for, therefore not geenrated enough, too many generated

24
Q

How do demerit and merit goods cuase MF

A

people consume to many or too little, due to ifnor failiure, causing prices to be to high, or to low

25
how does factor immobility cause mf
wastage fo scarece resource of workers
26
in general what is the cause of MF
where the wrong level fo a good or service is supplied and consumed, due to the price of it beign to high or to low
27
what is the social optimum level of output
where the cost to society is the same as the benefit to society
28
what is the free market equilibrium
mpb = mpc
29
why is the free market equilibrium at mpc = mpb
lack of accoutn for externaltiies
30
how to calc cost of a subsidy
rectangle made with new equilibrium price, what taht price woudlev been on old supply curve and new price
31
how to determien why a godo woudl cause a mf
look at the good look at the shit it does, is whataver link it to pimmfaced
32
explain hwo diesel cars may be seen as a mf
cars = pollution, congestion pollution adn congestion = negatiev externailites in a free market cost nto accoutned for hence too lwo rpice too high qty hence mf