Economics - Chapter 8

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  • Created by: sammilaw
  • Created on: 04-04-15 13:28
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  • Market Failures
    • Chapter 8
    • Partial market failure
      • Where the free market provides a product but with misallocation of resources
    • Complete market failure
      • Where the free market fails to provide a product at all i.e. public goods
    • Benefits of a monopoly
      • Research and development spending
      • Exploitation of economies of scale
      • International competitiveness
    • Forms of market failures:
      • Negative externalities
      • Positive externalities
      • Immobility of factors of production
      • Equity issues
      • Monopolies
      • Public goods
      • Imperfect information
    • Negative Externalities
      • Tax
      • Overproduction or overconsumption
      • MSC = MPC + MEC
    • Positive Externalities
      • Subsidies
      • Underproduction or underconsumption
      • MSB = MPB + MEB

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