Unit 2.10 Market Failure

Front

Market failure

Back

a situation where the economy's resources are not efficiently allocated: the market does not produce the goods and services that consumers most want and in a quantity that is required

Front

Social optimum quantity

Back

the level of output where the social costs equal social benefits: the market equilibrium reached fully takes into account all the costs and benefits associated with the production and consumption of goods

Front

merit goods

Back

a lack of information about how beneficial these products are for the consumer leads them to be underconsumed

Front

demerit goods

Back

a lack of information about how harmful these products are for the consumer leads them to be overconsumed

Front

public goods (public service)

Back

goods that consumers cannot be excluded from enjoying even if they have not paid; everyone can equally enjoy consuming the good

Front

private goods (private service)

Back

goods that is possible to exclude individuals from consuming if they have not paid; and there us rivalry in the consumption of the goods

Front

non-excludability

Back

consumers who have not paid for a good (or service) cannot be excluded from benefiting from the consumption of that good or service

Front

non-rivalry

Back

the consumption of the goods by one individual does not prevent another individual consuming the good at the same time

Front

Private costs

Back

the costs to an individual or business when they produce or consume a good

Front

external costs

Back

the costs to a third party from the production and consumption of a good or service