Unit 4 Revision

Question 1

Define Market Failure

Answer 1

Market failure is when there is inefficient allocation of resources caused by the free market forces

Question 2

What are some of the causes of market failure

Answer 2

Externalities 
De-merit and Merit Goods
Imperfect competition 
Information Failure 
Monopoly power

Question 3

Define Merit Goods

Answer 3

Merit goods are goods that are seen to socially beneficial but if left to the market to provide, they are likely to be under produced.

Question 4

Give two examples of merit goods

Answer 4

Vaccinations
Education
Museums

Question 5

Define De-merit goods

Answer 5

De-merit goods that are seen to be socially unbeneficial but if left to the free mark to provide, they are likely to be under-produced.

Question 6

Define Equity

Answer 6

giving people what they need to enjoy full, healthy lives.

Question 7

what is social benefit and social costs

Answer 7

Social benefit is the total benefit arising from the producing a good or service social benefit is the private and external benefit added together.

Social costs is the total costs of producing goods or services.
it the external and private cost added together.