Types Of Market Failure

Question 1

Merit goods

Answer 1

-Has social benefits that are larger than private benefits
-merit goods are under consumed in the free market because consumers don’t take into account the external benefit

Question 2

Demerit goods

Answer 2

-have private benefits that are larger than social benefits, often have negative consumption externalities
-will be over consumed in the free market and this causes a deadweight welfare list to society

Question 3

Monopoly

Answer 3

A market structure dominated by a single seller of a good, can restrict supply and raise price

Question 4

Occupational immobility of labour

Answer 4

As patterns of demand and employment change, many workers may find it difficult to easily secure new jobs, since they may lack the necessary skills

Question 5

Geographical immobility of labour

Answer 5

Where workers find it difficult to move to where employment opportunities may be due to family ties and differences in housing coata